A Top Buy And Hold Stock To Buy Right Now: Alphabet, Here's Why

Alphabet Inc. GOOGL has had a great run in 2023, up 56.89% since the start of the year. Despite the strong run, the stock is still looking attractive and is well below 2022 highs. 

Here's a breakdown of what makes Alphabet, the parent company of Google, a solid company to own for the next year or longer.

GOOGL is one of the top buy-and-hold stocks because it has been growing earnings, is expected to keep growing earnings, outperforms the S&P 500, has blossoming revenue, and is buying back shares.

• Alphabet has increased earnings per share (EPS) by an average of 28.8% per year over the last five years.
• Analysts expect yearly EPS growth of 18.4% over the next five years. The median yearly predicted EPS growth for S&P 500 stocks is 8.8%, so GOOGL is expected to grow at more than double the pace of other S&P 500 stocks.
• Revenues have also been growing at an average of 17.4% per year over the last five years.
• Over the last decade, GOOGL's share price has increased an average of 20.5% per year, while the S&P 500 has increased 12% per year over the same time frame.
• Alphabet has a buyback yield of 3.4%. Buyback yield is capital spent buying back shares divided by the market capitalization of the stock. Reduced shares outstanding means profits are split between fewer shareholders.

Increasing sales and revenue, and reduced shares outstanding, generally translate into a higher share price over the long term.

Yet here is why GOOGL is still a good buy right now, even after moving up more than 50% this year already.

From a price action perspective, the stock is in an uptrend making higher swing highs and higher swing lows. While the major indices declined in August and September, and remain below both the August and September peaks, GOOGL has been showing relative strength, moving to new highs for 2023 on October 10 and 11.

In terms of valuation, the stock has a P/E ratio of 29.7. Over the last five years, P/E values have ranged between 15.5 and 48.9. This stock isn't at bargain basement prices anymore, but rather it is trading near a fair value based on historic norms. 

There is also the option to wait and try to buy GOOGL on a pullback. Since April, pullbacks from a recent swing high have ranged between 6% and 10%. The 50-day moving average has also provided decent entry points in the uptrend so far this year.

There is another class of Alphabet shares that trade under the symbol GOOG. GOOGL and GOOG generally trade in a similar manner, but GOOGL shares have voting rights, while GOOG shareholders do not.

Disclaimer: The author owns shares of Alphabet in a long-term portfolio along with a number of other long-term holds. The Alphabet shares were purchased earlier in 2023 and the author has no plans to sell in the short-term.