This Stock is the Steal of the Century

Every few years there's a stock that people say you will regret not buying. And today I'm looking at the one they're calling the steel of the century. And we're going to find out if that's actually true. So guys, when I see a headline calling for the stock the the steel of the century, I pause because here's what I know. That phrase is very powerful. It's very emotional. It's designed to get your attention. It gets my attention. But what matters isn't the headline. It's the numbers behind the business. Cuz remember, when you buy a stock, you're buying a piece of a business. In this video, I'm going to walk you through what this article says, explain what steel the century really means in investing, and then we're going to run this stock through our principal driven investing process. We're going to look at its price and its value and its story to see if this is just another hype headline or is it a rare opportunity hiding in plain sight. And I'm going to tell you using our stock analyzer tool what price I would pay for it today. So you hear someone say a stock is the steel of the century. Sounds exciting. But here's the truth. It's just a phrase. It's just marketing. It doesn't actually mean the stock is guaranteed to make you rich. It just means someone out there thinks that it's a great buy. Now does that mean it's undervalued? Well, why else would we buy things unless we think it's undervalued? But as you remember, most people look at the stock price movement and not the fundamentals behind the stock, not the fundamentals of the business that you're buying. Now, why might someone call a stock the steel of the century? Okay, there are a few reasons. First off, they think the stock is way underpriced in our terms. They're saying, "Here's the value. Here is the price." Second, the market might be freaking out. Sometimes the whole market drops or a company has some temporary bad news and the stock will tank even if the long-term story is still strong. That could be a short-term gift. Third reason, the company's actually awesome and something big might happen that people aren't accounting for. Strong profits, smart leadership, great product launch, a solid place in the market. Maybe they're launching that new product or getting funding for something else. All three of these reasons are are some of the reasons why people would say this stock has amazing potential. But here's the catch. Just because someone calls it a steal doesn't mean it's actually a steal and doesn't mean you should buy it. You have to do your own homework. You have to understand the financials, understand the business, ask, "How does this company make money? What could go wrong? What could go right?" We are here to evaluate businesses because that's what you buy when you buy a stock. You're not buying a ticker going up and down. You're buying a business that is generating revenue, cash flow, making a great balance sheet, and you're paying for that future. The more you pay for it, the worse your returns. All right, let's talk about this article I came across from early this year titled, "Google stock could be the steal of the century." So, here's a story. Landon Swan, the founder of Lightfolio, went on Schwab Network and said, "The Alphabet, which is the parent company of Google, figures out one big challenge it's facing. The stock today might be seen as an absolute bargain. They said like 1997 Amazon level bargain. What's the problem? Well, people are asking me or rather chat GPT and other a models for answers instead of going to Google. That's a big deal. Google makes money when people search and then click on ads. But now with AI giving answers right away, this could lead to fewer folks clicking these ads. And less clicking equals less money. So what did Google do? They added AI summaries at the top of their search results. Smart move, right? But it's kind of a double-edged sword. It's helpful to users, but it also keeping people from scrolling down and clicking those ads. A potential revenue leak. But, and here's the kicker, Swan says if Alphabet can fix that ad clicking issue, today's stock price could be seen in the future as the steel of the century. His words, not mine. Now guys, what I want you to remember now is since this article came out, Google is up 100.33%. It has doubled in price. Now what's interesting is, and I'll get to this a little bit later, is they haven't changed this. They haven't changed what happens. You go to Google, type something in, AI is the first thing up, but yet the stock is up 100%. I want you to remember that as we go forward in this video. Now, the writer also likes what Alphabet's doing with Google Cloud. Revenue is up 34% year-over-year. That is serious growth. And Google Cloud is a high profit margin business. Guys, in this article, he talks about $75 billion in capital expenditures next year, up from its previous outlook of 59 billion. Guys, to go even further, Google had actually come out recently and said they may spend up to a hundred billion into tech and AI next year. That is huge capital expenditures. And for those of you who don't know, capital expenditures have two different methods. Maintenance and growth. The maintenance one is like, okay, we have to make sure we keep our data centers updated, etc. The growth is, guys, we want to grow the business. We're going to go invest a hundred billion dollars into growth. That way, our revenue and profit can be much higher. That's the big game. This is what tells me they're playing the long game. And as you know, I love companies that think and act long term, especially in a stock market that rewards quarterto- quarter results. The bottom line is whenever you're spending this kind of money, there's always going to be risk. But if this get this AI ad dilemma right, we could be potentially looking back at today's price and saying, "Wow, that was cheap." All right, so let's talk about what's happening with Google stock. Guys, like I said, it's up 100% since this article came out. It is close to $300 per share. And the massive move Warren Buffett's team just made that is turning heads on Wall Street. I was surprised when I saw that he bought Google. In fact, when somebody told me he did, I thought they were joking. And I was like, "Let me verify this." Birkshire Hathaway just dropped $5 billion in Alphabet stock. Now, was it Buffett himself? Maybe not directly. It could have been one of his lieutenants like Todd Combmes or Ted Wesler. Last quarter, they ended with 380ome billion. So 5 billion isn't a huge number. It's a little over 1.5% of their cash on hand. But Google's a big company. They could deploy a lot of capital in that. If they think this company is a buy, this is one of those things that could pay out long down the road. This is a big deal because Birkshshire does not chase hype. They don't buy buy flashy stocks just because everyone's talking about AI. Buffett and his lieutenants buy great businesses at what they perceive to be fair or undervalued prices, plain and simple. And the fact that he's now buying Google, the same man who made a monster return on Apple, should make you stop and think. Now, could this be the beginning of another long-term Buffett style bet? Maybe. Birkshshire rarely builds their positions all at once. They tend to nibble over several quarters, adding more when the price makes sense. And with tech stocks bouncing all over the place, especially with all this AI excitement, it's possible that Birkshshire is just getting started. The bottom line is when Buffett and his team put 5 billion into something, I'm going to pay attention. Yes, it's a small drip right now, but you got to sit there and say, "What did they see there?" And if you're a long-term investor who believes in AI, cash flow, and companies that dominate their space, this move should give you some sort of confidence in Alphabet. But remember, at what price? Because this does not mean it's an automatic buy today. In a few minutes, we're going to look at the numbers together, and I'm going to show you the price that I would be willing to buy Google at. But first, let's just slow down for a second because this is where a lot of new investors get tripped up. Just because Buffett buys a stock or someone on YouTube says a stock is a steal of a century doesn't mean it actually is. In fact, if you see it on YouTube, please be very, very aware that they're probably just trying to get clicks. Look at their process. Look at Buffett's process. Especially in this hyperdriven market, we've seen this over and over. People throw around flashy labels to grab attention. Hype is not a strategy. It's a distraction. The basic principle you have to understand is this. Price is what you pay. Value is what you get. That's it. That's the golden rule. And we want to buy when price and value are disconnected this way. A stock is only a true steal if its price is way below the value of the business behind it. Think Meta in November of 2022 at $88 a share. That was like buying a $100 gift card for I think about 30 bucks, maybe 25. That's a screaming deal. But if you pay some egregious amount for it because everyone else is excited, that's not investing. That's following the crowd off of a cliff. So before you believe the hype, ask yourself, do I actually know what this business is worth or am I just getting swept up in someone else's excitement? And guys, to take it a step further, even if you're able to determine the value of the business, there are going to be distractions that come up because as a stock goes down, news articles will come out saying this is why the stock is bad. Think November of 2022 with Meta. They were calling for Zuckerberg to be fired. End of Facebook, end of Instagram. WhatsApp isn't generating cash yet. Metaverse is draining their cash. It wasn't true. Investing is not about the headlines. It's about sitting there and saying, "Why is this stock down or up? Is it true? And can I still pay a reasonable price?" It's about discipline, logic, and buying great businesses at great prices. Now, remember guys, no matter what our title is on our videos, it's very important that you understand that we're here to teach something in every video. And those titles might be to grab an attention because our goal here is to get you to watch a video and say, "What can I learn from this?" We're here to try to teach a process of investing. This is exactly why I teach on YouTube because I was so sick of some idiot out there making a video about Tesla. The stock goes up and suddenly they're an investing guru. It doesn't work that way. Now, it is time to dig in. Let's analyze Google the everything money way, the principal driven investing way. We're going to look at the fundamentals, the cash flow, and what our projections are for the future long term. Most importantly, this will all be driven to figure out a price that makes sense for us to buy using our stock analyzer tool. So, pulling up the company right now, did it cross over 300 yet? Oh, it's 301 right now. Isn't that incredible? Market cap of 3.6 trillion. Whenever I look at the market cap, the next thing I'm going to do is look at their enterprise value. The reason being this difference right here is essentially the debt on hand, the net debt. If enterprise value is above market cap, there's a little bit of debt. But guess what? It's $50 billion and they generated 74 billion in free cash flow last year. That's like you owing everybody in the world $100,000 and after paying all your expenses every year, you basically have $200,000 left over. You could pay off all your debts in half a year. That's how incredible this is. That's how great a company balance sheet this company has. All right, guys. So last year's net income was $124 billion. I look at net income, then I look at cash flow, 73.5 billion. There's a big difference here. We don't like that. But Google has drastically increased its capital expenditures, and that takes time. Capital expenditures hurt your free cash flow. So, I can excuse them a little bit on this temporarily. Over the long haul, you want to make sure these numbers are jing together. It's selling for 29 times earnings, 49 times free cash flow. I don't know why they pay a dividend, but the problem is that dividend eats up $10 billion a year of their cash flow. Again, why pay a.3% dividend? This is absolutely useless to me. Profit margin. This is what I love. Look how much their profit margins up over the last 5 years. Their 5-year average was 27%. Last year was 32%. Is this a long-term trend? The reason this matters is later on when we do our stock analyzer tool, one of the lines is what's the profit margin going forward? If their profit margin keeps going up, is this going to be low? We have to understand these things or at least make some assumptions based on this. Growth rate 11% a year in revenue for the last 3 years, 17.5% for the last five, 18% for the last 10. You guys see a trend here? It is getting lower. As companies get bigger, revenue growth is harder to achieve. And one of the most important metrics we're going to look at here, return on invested capital. Now, if you're new to our channel, this is going to sound like a very complicated term, and it's not. It basically says, what is the return that the company gets on the money that they invest in their business? The market average is 9 to 10%. Anything above that is perceived to be a better quality company. 15%, 15%, those are pretty good numbers and probably getting better. I want you to look at this as a premium business because their return on capital is higher than the market, nine or 10%. that I'll apply later in our stock analyzer tool. All right. And by the way, our community stock rating is a buy, but this goes back six months because look at the intrinsic value average is 238 and the stock's currently at 300. So if you're in our community guys and you've voted on this or even haven't voted on this, go in there, do your assumptions, please give your value because we have to update these every so often. All right, so let's go to the eight pillars here. Our eight pillars are looking at a stock. We have check marks on six of them, X's on two of them. Check marks are return on capital, shares outstanding. Now guys, remember, just because they're buying back shares, doesn't mean that's a good thing. You want to buy shares that are cheap. Are they cheap now? We'll find out soon. Cash flow is up, net income is up, revenue is up, very little debt. So, all these check marks are wonderful, but the two X's are valuation driven. five-year PE and fiveyear price of free cash flow. These are high numbers, but just because they're high doesn't mean it's overvalued. The example I always give is if God came down today and said, "Paul, Google's going to double its profit every year for the next 20 years." This would be the steel of a century. Absolutely the steal of a century. If God came down and said they're going to have zero growth and free cash flow and net income for the next 20 years, this is insanely expensive. We're paying for some future stream of cash flow. The faster that can grow, the more premium you can pay today. That's really important to understand. This is the Philip Fischer way of thinking about investing. So, let's go to the next one. Analyst estimates. What do analysts think is going to happen with this company? Well, guys, they're expecting the year to end for $1023 per share in earnings, growing to 1780 over the next four years. Look at this growth rate. 24% six and a half 13 and a half 16 and a half 23 and a half. They actually have a faster growth rate as time goes on which is pretty rare. And for revenue double digit 12.6 11 10.7 109 10.23 growing to $600 billion in revenue in the next four years. That's a lot of revenue guys. A lot. Now before we get into stock analyzer I want you to understand guys there's a difference between investors and speculators. Everyone thinks they're investing, they lose money, though, because they're trying to pick these amazing winners. Real true great investors do the opposite. They eliminate the losers first. That's what we're doing here when we analyze a stock. What we're trying to do is say, give us the reasons to not buy to a certain element. There's always going to be reason not to buy, but right now, I'm looking at this company going, great balance sheet, great future potential. Question is, is it too expensive? That's what we're going to do here with the stock analyzer tool. We have a story. We have numbers. We put them together right here. We have to make good assumptions about the future though, guys. Don't give the roses of assumptions. This is why we have low, middle, and high assumptions here. Give conservative ones, aggressive ones, and what you think will actually happen in the middle. If you're sitting there always doing all rosy ones, you're not preparing yourself for the downside risk. This is what's truly important about stock analyzer. And guys, this is exactly why stock analyzer tool is so popular. It's used over a million times per year by our users for exactly that. It allows people to put the numbers and a story together to come up with a price that works. So, let's pull up the last time I did Alphabet or Google. I did a 10-year analysis and you can do between 1 and 20 years if you have our software. Revenue growth 5, 9, and 13% over the next 10 years. Guys, I feel like five is low. if they have this AI issue you have to work through, I think it's low. But I think 13 is really high and difficult to hit. So I'm I'm happy with this 5 9 or 13. Now if you said to me 6, 10, and 14, okay, makes sense to me. I I don't think that there's that we don't know the exact number in the future. But if you're going to put in, you know, 9, 10, and 11, 9's not really a low. 11's not really a high. There are there is a wider range for this. And if you put in 35 and 28, I'd be like, "Okay, well, wait a second. Pump the brakes here." This is the art of investing. And this is why people in our community will share screenshots of their stock analyzer with the people in the community and say, "Hey, what do you think about the my assumptions here?" It's a very important task to be done when you're using this tool. Now, remember, we're going to profit margin and free cash flow margin. So, before I did 23, 27, and 31. I don't know because we only have one year of 32% here. Is this a fluke year? Is it going to get better? Guys, I'm actually going to increase my assumptions here. I'm going to do 25, 30, and 35. And I'm going to do the same for free cash flow because over the long run, free cash flow and net income will be similar. But look what I did here. I did my low at the 10-year average because look what's happening. 10 year profit margin is 25%. 5 years is 27. 1 year is 32. They seem to be trending up. So I want to give them that momentum. So I put in 25, 30, and 35. Now finally, not finally, next, what's the PE that I would assign to this company 10 years from now. Remember, we have growing returns on capital. So I tell people start at the market average of 15 or 16 PE. Go higher for good companies, lower for bad companies. I would consider comp Google to be a phenomenal company. How phenomenal guys? I put 20 23 and 26 in for my 10-year out PE. That's a high PE. That's a 33% and more premium on the company, but it deserves it. Every single time, you know, we do a lot of marketing. We do have a lot of we have we have 50,000 emails in our in our group. I would I would guess a large large percentage are Gmail emails. I get made fun of still for having Yahoo email. I actually like Yahoo email more than a Gmail. I have some Gmail accounts, but I don't use them very much. That's my opinion. Now finally, what is your desired return? Now guys, I'm putting in 9 or 10% here. I put in 9% because what I'm trying to do is what's the value of the business? What's the value today? If you're to sell the company in normal market, get the market return. But remember, we're not here to sit here and get the market return for a company. We buy an individual company. You need to put in a higher desired return. That gives you that margin of safety. How high that's depends on you. How comfortable you feel with Google. The more comfortable you feel, the lower your return requirement should be. The less comfortable you feel, the higher your return requirement should be. That's what we're trying to do. That's what this tool does. It allows you to model out based on your impressions of the company. Hope is not a plan. I used to buy stocks hoping that they would go up. But hope doesn't protect you when the market turns. Hope doesn't help you sleep better at night. Hope it doesn't decrease your fear. I had to learn how to build a real strategy, one that makes sure that I personally never go to zero. Now, every investment I make is based on numbers, not hype. This is why I built everything money. It was built for me. I wanted the tools that gave me clarity, took the fear out of investing, and helped me make better decisions that helped me sleep better. People saw me using them on YouTube and said, "Paul, can you give us that software?" And I said, "Well, I can't cuz it's mine right now, but I can create it." And so, I did. And a real community was born. Real people sharing ideas, live chats, live streams, and tools that help beat 99% of investors. I still use these tools like the stock analyzer every single day. Stop guessing, start learning. Click the link below, try our trial, $7 for 7 days, and see how confidence will replace your fear. So, I hit the analyze button. The stock's currently at 300. Well, I have a low price of 168, a high price of 530, a middle price of 303. So, if this article was written, guys, look at that. This article was written 7 months ago, and the stock was at 150. It was below my lowest number. So, when that guy wrote that article, he was probably on to something except for one thing. Here's the problem. They haven't fixed that problem he's talking about. If you go Google something right now, you still get the AI results for it, guys. Now, I want to show you something that's really powerful that I wish I'd learned 25 years ago because it's absolutely gotten a crazy return on the cash that I have sitting around waiting to invest. Let me show you. It's called selling cash secured puts. So, for example, let's say we go out to a month from here, which is let's call it December 19th, and I like Google, but I want a little bit of a discount to $300. Let's say I want to pay $280 for it. I go to my puts here, 280 bucks. Somebody's willing to pay me $5.52 per share. And if the stock is below 280, I get the stock for 280 bucks, and I keep my $5.52. How is that useful? Well, guys, if you do that over and over, the annualized return on that cash is 25.7%. I do this all the time because I want to get more than that 4% return on my cash, and I get to buy companies I love at lower prices. So guys, quick heads up for the for those of you who are interested in this to generate real cash flow from the stocks you own or the stocks you want to buy. We've got a great options class coming up at the start of the year. And this is exactly what we're going to teach you. Not only how to get more return on your cash, but on the stocks in your portfolio, how to make a few extra percentage points every year on those stocks to generate extra income. But here's the deal. We're giving first access to everyone on our email list. So, if you want in early, click the link in the description of this video. Spots are going to be limited, so make sure you get yourself on the list. The first class we did this year, we only allowed 30 people in. So, make sure that with a channel of 370,000 that you get in on this list so you're not left out. Now, guys, earlier this year, I picked seven stocks to start the year to go headto-head with Magnificent 7. So, click on the video on your screen to see which my personal Magnificent 7 were and how they have stacked up. The results are probably going to surprise you.