Alphabet (GOOGL) Leads FANG Stocks Ahead of Earnings

Google parent Alphabet Inc. (GOOGL) is easily outpacing the other FANG stocks in 2021. Alphabet stock is up 42% vs. Facebook, Inc.’s (FB) 23.35% return, Amazon.com, Inc.’s (AMZN) 8.99%, and -1.56% for Netflix, Inc. (NFLX).

Alphabet, near all-time highs, is quickly approaching its second quarter earnings report, scheduled for July 27. The logical question on everyone’s mind: Is a beat in the cards?

To answer that, let’s do two things. First, let’s look at Alphabet’s recent earnings reports and how the company stacked up relative to expectations. Then, we’ll check in on the chart, and we’ll see what the Big Money thinks about the shares.

Up first, let’s see Alphabet’s earnings the past four quarters and how they stacked up vs. consensus. You can see that in the table below:

Notice anything? In all four out of the four prior quarters, Alphabet beat estimates. And if you look at the prior two, the company destroyed consensus! That’s what you want to see. 

Last quarter’s beat is likely what sent the current quarter’s estimate from earnings per share of $15.50 to $19.21 today:

Clearly, the company has been firing on all cylinders from an earnings standpoint. And the stock price has followed that same trend. They say that the trend is your friend. The trend of Big Money is what I follow. And it’s been a one-way train higher in 2021.

How a stock trades is critical. Oftentimes, it can clue you in on what to expect going forward. That’s why, for me, I pay attention to buy pressure in the shares. 

Now, I have a proprietary way of tracking Big Money moving into a stock. But to show you a way to visualize it, check out how Alphabet has been in the accumulation phase since June. 

But more importantly, look at the times the shares saw Big Money buying. You can see that in the yellow bubbles at the top. These line up with chunky buy volumes:

That first bubble was Jan. 20, when GOOGL shares were trading at $1,880. The stock is trading at $2,533 as of this writing.

Let’s keep it simple: Don’t fight a strong trend of earnings beats. And don’t fight Big Money buying!

The Bottom Line

So, let’s wrap this all up. Alphabet has a history of beating analyst estimates for earnings. Don’t be surprised if that’s the case this quarter. Additionally, big money appears to be pouring into the stock as it easily outpaces the other FANG stocks in 2021. Those are bullish signs that there may be more upside in the coming weeks and months.

Disclosure: The author holds long positions in GOOG, GOOGL, and NFLX in personal and managed accounts at the time of publication. He holds no positions in FB or AMZN at the time of publication.

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