Tuesday's IBD 50 Stocks To Watch pick, Google parent Alphabet, is within striking distance of a buy point despite today's stock market sell-off.
Stocks To Buy And Watch: Alphabet
Mountain View, Calif.-based Alphabet reported strong earnings and sales results on Feb. 1 and announced a 20-for-1 stock split.
Although earning growth slowed from the previous quarters, the results were still strong and sent shares gapping up the next day. Earnings jumped 38% year over year to $30.69 per share on revenue of $75.3 billion, up 32% vs. the year-ago period.
Internet search and other revenue rose 36% to $43.30 billion vs. estimates of $40.95 billion. Google said cloud-computing revenue rose more than 45% to $5.54 billion vs. estimates of $5.57 billion. Google cloud cut its operating loss to $890 million, missing estimates of a lower $758 million loss.
With the company's next earnings report later this month, analysts are waiting to see if Alphabet will mark down the value of some investments. In the fourth-quarter results, Alphabet included a $2.84 per-share gain in equity investments. A UBS analyst speculated that the company could take a noncash markdown on some investments in its first-quarter earnings of 2022.
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Alphabet's IBD Stock Ratings
Alphabet ranks No. 35 in the IBD 50. The computer-generated list of leading growth stocks highlights companies with strong relative price strength and top-notch fundamentals.
GOOGL shows a strong 96 out of 99 Earnings Per Share Rating and a best-possible SMR grade of A, according to IBD Stock Checkup. The EPS Rating tracks a company's short- and long-term earnings performance. The SMR Rating analyzes a company's sales, margins and return on equity, and offers a letter grade from A (the best) to E (the worst).
IBD Stock Checkup also shows that GOOGL stock has a 93 out of a maximum 99 IBD Composite Rating.
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GOOGL Stock Shows Buy Point
Also featured in this week's Stocks Near A Buy Zone column, Alphabet is rapidly nearing a 2,875.97 buy point in a cup with handle, according to IBD MarketSmith chart analysis. Shares are about 2% away from the latest entry amid a decline at midday Tuesday.
A key strength is the stock's relative strength line. The RS line is nearing new highs after holding steady since early February. The RS line should hit a new high on the breakout day or shortly thereafter.
The base is first stage, and early-stage bases historically have the best chance of making strong gains from breakouts.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the stock market.
