Why Alphabet Inc (GOOGL) Stock Is the One to Beat in September
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We came, we saw, we kicked its ass! Bill Murray’s character said that in the movie Ghostbusters after he and Dan Ackroyd and Harold Ramis captured a ghost in a posh, Plaza-like hotel in New York City. Of course, it just as easily could have been Alphabet Inc (NASDAQ:GOOG, NASDAQ:GOOGL) shareholders after GOOGL stock hit $1,000 earlier this summer.
Source: Brionv via Wikimedia (Modified)
Things haven’t gone so well since those halcyon days back in June; GOOGL stock is down 6% from its June 6 high of $1,008.61. Meanwhile, Facebook Inc (NASDAQ:FB), one of its rivals for world advertising domination, is up more than 8% in the same period.
That’s not surprising considering FB stock has outperformed GOOGL stock in four out of the last five years; the only winning year for Alphabet being 2015 when it had a total return of 46.6%, 12.5 percentage points clear of Facebook.
Seriously, Alphabet shareholders can have the one off, because it’s not even in the same league as Domino’s Pizza, Inc. (NYSE:DPZ), whose five-year annual return is less than half the world’s second-largest pizza company.
GOOGL Stock Will Rise in September
I have it on good authority that Alphabet will deliver for shareholders come Labor Day.
Andrea Kramer of Schaeffer’s Investment Research recently wrote a piece on its website about the best and worst FAANG stocks to own in September.
According to Schaeffer’s Quantitative Analyst Chris Prybal, GOOGL stock has averaged a 5.72% return in September over the past 13 years. More importantly, Alphabet shareholders have gotten positive September returns in 10 out of 13 of those years.
So, you’re virtually guaranteed to make money on its stock next month if you buy now. I’m half facetious when I say this, but as Kramer tells us, it’s a win rate that’s pretty hard to ignore.
“Recent options buyers have already been boarding the bullish bandwagon for Alphabet stock. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), GOOGL sports a 10-day call/put volume ratio of 1.55 — higher than 88% of all other readings from the past year,” Kramer says. “In other words, speculators have demonstrated a healthier-than-usual appetite for GOOGL calls over puts lately. Not even two weeks ago, it was Alphabet puts that were flying off the shelves.”
Not convinced?
Let’s go back and look three different calendar years where its stock delivered annual returns of 40% or more — 2009, 2013 and 2015 — and I think we’ll find that September was a good month for one or more of those years.
GOOGL Stock – September Returns
Year
Annual Return
September Return
2009
101.5%
7.4%
2013
58.4%
3.4%
2015
46.6%
-1.5%
Still not convinced?
In 2008, GOOGL stock’s worst year on record, it lost 13.6% in September. That’s a huge amount until you consider that the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) lost 9.4% that September, approximately the same loss as Google on a relative basis if you take into account each stock’s overall loss that year.
Bottom Line on GOOGL Stock
The last time I wrote about Alphabet in early August, I characterized its stock as a buy despite some initiatives that seem destined to fail such as Project Malta.
Given this new information, it’s definitely a buy, if only for September, but you better get in soon because September is already upon us.
As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.
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