Google (GOOG) has been on a tear in the past year, going from $560 or so last summer to around $920 right now for a 60% gain.
Some people compare Google to Apple (AAPL), wondering how long the momentum will keep up — especially after red-hot run for its 2004 IPO to the market’s peak in 2007 added 800% to shares … only to be followed by a horrific 60% decline as the broader market cratered.
But there are reasons to expect growth to continue. While online advertising remains Google’s bread and butter, in its annual report for 2012 the company reported that “other revenues” hit $829 million in the last fiscal year — a huge figure that represents 6% of total revenue. Not bad for a bunch of pet projects.
And this year has seen even more focus on outside revenue sources, including subscription-based YouTube channels to capitalize on its 1 billion-plus users, an ambitious Google Fiber Internet service project and a line of slick Nexus smartphones and tablets that will get it into the hardware game.
Google’s Q1 numbers were great. Revenues climbed by 31% to $13.97 billion, while net income improved 16% to $3.35 billion. To top it off, GOOG has about $50 billion in the bank.
The stock has a forward P/E of only about 17 right now — right on par with the forward P/E of the entire Nasdaq 100, so it seems fairly valued. And if the revenue keeps coming in, we can expect future growth to push earnings higher and support a move in share prices, too.
With that mix of stability and future growth potential, the $900-plus price on Google might seem cheap down the road.
Google reports earnings this Thursday, so stay tuned.