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Google: Heading to $600 (For Two Minutes)!
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Monday, January 29, 2007
You know you've hit it big when your company becomes an everyday verb
(I've been "Googled!"), and the growth of Google Inc. (NASDAQ:GOOG) has
been simply breathtaking. So many people thought it was overvalued when
the company first went on the market, only to see the stock price keep
climbing. Believe it or not, I think there's still time to make some
serious money on this stock, even though it's trading close to $500 and
has a P/E over 60.
Google will announce its fourth-quarter earnings on January 31, and if they're as positive as they've been in the past, the stock price should keep going up. This company has enjoyed more than 10% growth in its operating profits for several consecutive quarters now, and I doubt it will be any different for the fourth quarter. There are some concerns that Checkout, its payment system that is challenging the popular PayPal, will dent its earnings, Google has been doing aggressive promotions and the company has a small share of the market, but with companies steadily increasing their online advertising spending, I think Google's results will still be strong.
There are some reasons to worry for the long-term. It's always possible that new search technology will emerge to challenge Google, and the company will have to continue to invest money to keep its cutting edge. It's not yet clear what kind of revenues will result from the purchase of YouTube, and it's possible that the video site will create a number of legal headaches for Google. Also, companies may find new ways to advertise online that don't involve Google.
But for now, I still think this company is on an upward trajectory. Its huge profits so far have supplied the company with billions in cash and no debt, which Google is using to grow internationally and to buy other companies. I think this is going to hit $600 this year but I'd be careful going into 2008.
Type of stock: A hugely popular and profitable Internet company with a great deal of upside left. This is a risky stock -- even as Google continues going up, the swings are so extreme that you could lose money. This stock is cruel and falls harder (psychologically) than it rises.
Price target: Although risky, I'd buy now and ride this one up. If you see it get to $600, as I'm predicting, I'd seriously consider selling. You might lose a bit on the upside, but you'll protect yourself against a potential long-term decline.
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Google: Heading to $600 (For Two Minutes)!
Google will announce its fourth-quarter earnings on January 31, and if they're as positive as they've been in the past, the stock price should keep going up. This company has enjoyed more than 10% growth in its operating profits for several consecutive quarters now, and I doubt it will be any different for the fourth quarter. There are some concerns that Checkout, its payment system that is challenging the popular PayPal, will dent its earnings, Google has been doing aggressive promotions and the company has a small share of the market, but with companies steadily increasing their online advertising spending, I think Google's results will still be strong.
There are some reasons to worry for the long-term. It's always possible that new search technology will emerge to challenge Google, and the company will have to continue to invest money to keep its cutting edge. It's not yet clear what kind of revenues will result from the purchase of YouTube, and it's possible that the video site will create a number of legal headaches for Google. Also, companies may find new ways to advertise online that don't involve Google.
But for now, I still think this company is on an upward trajectory. Its huge profits so far have supplied the company with billions in cash and no debt, which Google is using to grow internationally and to buy other companies. I think this is going to hit $600 this year but I'd be careful going into 2008.
Type of stock: A hugely popular and profitable Internet company with a great deal of upside left. This is a risky stock -- even as Google continues going up, the swings are so extreme that you could lose money. This stock is cruel and falls harder (psychologically) than it rises.
Price target: Although risky, I'd buy now and ride this one up. If you see it get to $600, as I'm predicting, I'd seriously consider selling. You might lose a bit on the upside, but you'll protect yourself against a potential long-term decline.
hilaryonstocks at 12:26:00 PM EST Blog about this entry |
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This entry has 5 comments: (Add your own)
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You guys are dancing with the devil. Why buy at 35 times when they will miss their number sooner or later due to new and quicker competition. There are two many low P/E stocks with great dividends that have more potential. Cat will beat goog every way but loose while you are waiting for Goog to move another 20%. What will you pay in risk for that 20%?
MT and SSL are 8.5 times '07 earnings and are growing at 30+%. Duh!
Be back when the bust comes. -
Google does worry me as it does many of the other stock owners. however its not trading at 60 p/e its trading at about 35 this years earnings and about 31 times next years earnings. The other thing that i like about google is that it has so many areas to grow. this isn't a company that deals with one specific thing they can grow and move into everything on the web which is just about everything. What competition does google really have? yahoo is a joke and msn isn't any better. They will hit a wall at some point with advertising dollars but they can move into so many other areas to keep that growth going. I don't personally see an end to google anytime soon.
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Google will probably hit the same issue that Amazon faced several years ago, it's just a timing of when not if. Will it be when they miss numbers consistently or competition, who knows? Trying to keep that P/E at 60 requires serious earnings growth that will be hard to maintain simply due to the 'law of large companies', as your earnings base in actual dollars gets so large, a firm needs to grow revenues at exponential levels.
By the Way - On Wisconsin! -
I liked it when it went public at around $100 my broker/ financial consultant said it was just a flash in the pan he must have been cooking crack. For what its worth I bought it at $350 have a cell on it at $550. No longer use a broker/ financial consultant do my own homework.
5/14/07 9:20 PM