Emily Roland (John Hancock Investment Management) is bullish on Alphabet Inc (NASDAQ: GOOGL) even though she sees a “recession” by the end of 2022.
Roland’s bull case for the Google stock
It’s an interesting call since the multinational makes most of its revenue from “advertising” which tends to be the first expenditure that’s cut in the event of an economic downturn.
But Roland has a different angle on Google. Speaking with CNBC’s Scott Wapner on “Closing Bell: Overtime”, she said:
In a recessionary environment, you want to notch up on quality. So, we’re talking companies with great balance sheets, good free cash flow, ability to maintain their margins and grow organically.
Despite the macro headwinds, Alphabet had its ad revenue up 12% year-on-year in the fiscal second quarter. Her bullish view is in line with Wall Street that recommends you buy Google shares as they have upside to $142 on average.
Alphabet is growth at a reasonable price
Roland sees the mega-cap tech name as “growth at a reasonable price” now that it’s down roughly 25% versus the start of 2022. She added:
We don’t want to own unprofitable tech companies; growth at any price type of companies that need to tap the capital markets to grow. Google is checking all the boxes for us on the quality front.
The stock is currently trading at 19 times forward versus 25 times on average over the past five years. Per the recent 13F filings, several notable billionaires have been increasing their exposure to this FAANG stock in recent months.
Another name big cap name she likes here is Johnson & Johnson.
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