Google Isn’t as Expensive as You May Believe

By: InvestmentContrarian

George Leong writes: For all of you who are attracted by the battered price of Facebook, Inc. (NASDAQ/FB), I suggest you keep on reading: Google Inc. (NASDAQ/GOOG) is the top player in the Internet space, in spite of it hitting an all-time record high of $776.60 last Friday, and here’s why.

My stock analysis indicates that some of you may feel that, at nearly $800.00 a share, Google is valued at way too lofty a price. Moreover, some may be spooked by the recent collapse of Apple Inc. (NASDAQ/AAPL) on the price chart after trading at over $705.00 a share in September 2012. What I would say to you is that Google is not Apple, and it’s definitely a much better company than Facebook, based on my stock analysis.

In fact, I think Google has more of an opportunity to reach $1,000 than Apple. Of course, that is if Google doesn’t undergo a stock split. I recall when Google first debuted in August 2004 at $100.00 a share, when I was debating in my mind whether the stock was a highflier or the real thing. At that time, Internet stocks were really still in their infancy.

The stock chart for Google below shows the stock’s upward trending channel and strong relative strength. But you need to be careful, as the stock could decline back to the area defined by the blue circle between $715.00 and the current price. A retrenchment into this space could signal a buy, based on my technical analysis.

Chart courtesy of www.StockCharts.com

Knowing what I have learned over the past eight years, I wish I had picked up some shares of Google; but then again, there will always be opportunities available, as my stock analysis suggests.

I look at Facebook with the same reasoning. Could this be the next Google in the Internet space? At less than $30.00 a share, it sure is tempting; but the valuation is too expensive at this time, compared to Google. Now, if Facebook can really grow its mobile advertising business, I may consider the stock a contrarian pick–but not for the time being.

In the case of Google, a $700.00-plus stock is not cheap; but based on a valuation and comparative basis, my stock analysis suggests that Google is still tops.

According to my stock analysis, Google will continue to dominate and gain market share in the Internet space, especially with its Android-powered “Nexus” smartphones and Wi-Fi Internet offering.

And in spite of its higher stock price, my stock analysis shows the stock continues to attract institutional buying, unlike many of the other major technology companies. Institution investors purchased 220,152 shares over the past quarter-to-quarter, which represents a 0.08% rise in institutional ownership, based on information by Thomson Financial. By comparison, institutional investors have sold 4.8 million shares of Apple over the same period.

Short-selling is also relatively muted, with a mere 3.6 million shares short, or about 1.4% of the float, as of January 15, 2013, according to Thomson Financial.

If you are eyeing Google, my stock analysis suggests that you should wait for weakness to enter, as this has been the recent pattern. Alternatively, my stock analysis indicates that you can also buy call options as a risk-controlled trade.

Please be advised that any stock mentioned is meant only for illustrative purposes and should not be construed as a recommendation. You can use these strategies for many different situations.

Source: http://www.investmentcontrarians.com/stock-market/google-isnt-as-expensive-as-you-may-believe/1380/

By George Leong, BA, B. Comm.
www.investmentcontrarians.com

Investment Contrarians is our daily financial e-letter dedicated to helping investors make money by going against the “herd mentality.”

George Leong, B. Comm. is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services. See George Leong Article Archives

Copyright © 2013 Investment Contrarians- All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.