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A Quick Thought On “Expensive” Software Stocks
By The Smart Investor  •  July 7, 2020
A few days ago, I was mucking around with historical data on Alphabet, the parent company of the internet search engine of our time, Google. I found some interesting data on this company that led to me writing this short but hopefully thought-provoking article. Alphabet (NASDAQ: GOOGL) was listed in August 2004 and closed its first trading day at a share price of US$50. By 31 January 2005, Alphabet’s share price had risen to US$98, and it carried an astronomical price-to-earnings ratio of 250. On 31 January 2005, Alphabet’s revenue and profit were respectively US$2.67 billion and US$222 million, giving rise to a profit margin of 8.3%. Today, Alphabet’s share price is US$1,418, which represents an annualised return of 19% from 31 January 2005. Its P/E ratio has shrunk to 29, and the company’s revenue and profit are US$166.7 billion and US$34.5 billion, respectively, which equate to a profit margin of 21%....
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By The Smart Investor
The Smart Investor is co-founded by David Kuo, Joanna Sng, and Chin Hui Leong. The company was formed in late 2019 from the ashes of the Motley Fool Singapore. The Smart Investor believes that everybody can learn how to invest, smartly. We aim to educate people on how to invest smartly by providing investing education, stock commentary and market coverage for Singapore and around the world.
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