In the previous article Options Insights: Criteria For Selecting Long-Term Target & Recommendations, I am a little worried about $Alphabet(GOOG)$ 's performance in the mobile era.
But on second thought, I think $Alphabet(GOOG)$ has a strong moat in the search engine. Bing, Yahoo, and Baidu do not have any opportunity to challenge Google.
Here are 3 reasons why $Alphabet(GOOG)$ is good target for short put:
1. Healthy revenue growth
Options investors must do quantitative analysis, and can not only focus on the qualatative things.
We can use Tiger app to do fundamental analysis, I often look at this place:
click the ticker → enter its interface → click the "Company" → click "Financials " → find "Total Revenue"
Let's look at this table:
Against the backdrop of mobile era, it's impressive for GOOG to have 20% yoy growth based on its large enterprise value.
2. Healthy profits and historically low PE (<99%)
We can check the company's P/E ratio on Tiger app:
click the ticker → enter its interface → click the "Analysis" → find "Valuation Anlysis"
Look at this table:
Its P/E is only 19x, which is lower than the 99% data in the past 5 years. Plus, it has a relatively good revenue growth.
Therefore, it's a good chance to short put of GOOG right now.
3. Future Outlook
When a company's PE drops sharply or is at an all-time low, usually due to a decline in business or a change in fundamentals.
But $Alphabet(GOOG)$ competitive landscape is still ok, there is no essential changes.
I would not be strongly bullish on $Alphabet(GOOG)$ given the global economy and lack of advertising growth.
But it is a good choice for a weak bullish strategy like sell put.
As long as the company has a long-term valuation / value and the stock price does not plummet, we can earn the premium of sell put.
Let's look at Google's revenue and EPS estimates for next year, we can see that its growth is really very limited. But Forward PE: 105.44/6.47 = 16.3. It's okay for me.
Revenue estimates
EPS estimates
Summary
1. $Alphabet(GOOG)$ is added into the list of my SCSP(sell cash-secured puts) strategy
2. options investors should learn to valuation/ quantitative analysis.
Welcome to recommend suitable targets for sell put :)
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