Analysts are bullish on Alphabet (GOOGL), but should you follow their advice?
New York: So, Wall Street analysts are saying Alphabet, you know, GOOGL, is a solid buy right now. But let’s break it down a bit. Analysts often give recommendations that can sway investors on whether to buy, sell, or hold a stock. But do these ratings really mean much?
Alphabet has an average brokerage recommendation of 1.38, which is pretty close to a Strong Buy. Out of 50 firms, 39 say Strong Buy and three say Buy. That’s a lot of confidence, right?
But hold on! Just because they’re saying buy doesn’t mean you should jump in without thinking. Studies show that these recommendations don’t always help investors pick the best stocks. Why? Well, brokerage firms often have their own interests at heart, which can lead to overly optimistic ratings.
For instance, they tend to give five Strong Buy ratings for every one Strong Sell. So, their advice might not always align with what’s best for you as a retail investor. It’s smart to use their insights to back up your own research instead.
Speaking of research, there’s this tool called Zacks Rank that’s pretty handy. It rates stocks from 1 to 5 based on earnings estimate revisions, which are more reliable indicators of stock performance. So, if you’re looking at Alphabet, it’s wise to check how it ranks there too.
Now, the Zacks Rank is different from the average brokerage recommendation. While the ABR is based on analyst ratings, Zacks uses earnings estimates to give a clearer picture. Plus, it’s updated more frequently, so you get timely info.
As for Alphabet, the earnings estimate has stayed steady at $8.03 recently. This stability might mean the stock will just follow the market trends for now. Currently, it holds a Zacks Rank of 3, which is a Hold. So, while the buy ratings are nice, it might be smart to tread carefully.
In the end, it’s all about doing your homework. Don’t just rely on what the analysts say. Make sure you’re comfortable with your investment choices.
