Alphabet: Unhealthy Appetite
Alphabet made a small smartwatch technology purchase.
The company has a long history of hardware failures and a smartwatch push will likely be no exception.
Alphabet continues losing substantial amounts of money on Other Bets and generates low margins on hardware.
The stock is incredibly cheap based on ex-cash, 2020 non-GAAP EPS estimates of up to $71.
On Christmas Eve, my previous research extolled the benefits of buying Alphabet (GOOG, GOOGL) despite doubts that the company would successfully transition to material hardware sales. The company appears to have an unhealthy appetite for hardware with the latest purchase suggesting another losing push into smartwatches. Regardless, the stock remains a buy even after a $115 rally in under a month to over $1,100.
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Disclosure: Long AAPL, FIT. Please review the disclaimer page for more details.