Google parent Alphabet (GOOGL) - Get Report  is slated to announce third-quarter earnings on Thursday, and the stock this week hit new all-time highs.

Even so, Alphabet shares are up just 6.5% so far this year. That's less than the year-to-date gains of its FANG brethren: Facebook is up 27%, Amazon is up 24% and Netflix is up 11%. 

Alphabet shares may skyrocket soon and catch up with those other tech names, however. If its earnings report is positive, its new Pixel phones gather momentum and Alphabet's internet ad budgets find a boost just ahead of the holiday season, this stock could go through the roof.

Image placeholder title

Alphabet and Facebook are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells GOOGL or FB? Learn more now.

Think of Alphabet as a collection of businesses, with the main player, of course, being Google (its core products: Search, Android, Maps, Chrome, YouTube, Google Play, and Gmail). Google holds more than 80% of the market share in the global online search space. Other Alphabet businesses include Verily, Calico, X, Nest, GV, Google Capital and Access/Google Fiber.

No matter the competition -- whether it's Microsoft's Bing, BaiduYahoo! or Verizon Communications' AOL -- Google has held on to its position in the search engine market (mobile/tablet and PC). Meanwhile, its Chrome browser remains the preferred one in the PC and mobile/tablet segments.

For the third quarter, analysts expect Alphabet to report revenue of $22.05 billion, which would mark an 18% increase over the $18.68 billion the company reported for the third quarter of 2015. The average analyst estimate is for adjusted earnings per share of $8.63, which would 17% greater than the $7.35 the company reported a year earlier. 

For the full year, experts project Alphabet to deliver 18% top-line growth, accompanied by a 15% increase in EPS.

Although Facebook is growing at a faster clip, Alphabet's outsized annual free cash flow and $78.46 billion cash hoard (which nearly matches the combined market capitalizations of Twitter, Nvidia and Nokia) place it at a key vantage position with the capacity for aggressive acquisitions.

As for Google's Pixel, it could always be argued that the phones could have come in earlier, but Alphabet's research & development and tech prowess makes the Pixel extremely well positioned to gain a sizable chunk of the market share.

The Pixel phone has tremendous possibility; it could completely transform Alphabet as a company, given the deep connection consumers have developed with the Google brand and its products.

And because Google, Alphabet's core business, continues to bring in great revenue, Alphabet can afford to invest money in its other ventures (including "moonshot" projects such as self-driving cars).

Of course, we would like to see some of these other ventures take off and make profits. However, as of now, Alphabet can afford the luxury of experimentation thanks to its highly profitable digital ad business.

At a price/earnings-to-growth ratio of 1.35, Alphabet remains one of the most undervalued stocks in the large-cap tech space. SAP has a PEG ratio of 1.75, while Amazon's is 2.95, Microsoft's is 2.20 and Oracle's is 1.86.

Go long on this stock, and stay with it till you retire.

---

85% Accurate Trader gives his Personal Guarantee: "Give Me 9 Minutes a Week and I Guarantee You $67,548 a Year." What if I told you I know a way you can see a $67,548 per year - or more - in profitable trades just by following this simple step-by-step process? The trader who is sharing this secret has been right more than 8 out of 10 times, turning $5,000 into more than $5 million for himself. Click here to see how easy it is to follow his lead and collect thousands of dollars in "Free Money" every month.

The author is an independent contributor who at the time of publication owned none of the stocks mentioned.