Big Tech Stocks: Google
Somehow, Google gradually replaced Yahoo! (YHOO) as my go-to search engine, as I think it did for the majority of computer users, making it one of the most dominant big tech stocks out there. GOOG dominates the search market, handling 2 of every 3 searches. As Google has grown, advertisers began to allocate more and more of their budgets to the internet.
Google’s ownership of search, and advertisers’ need to spend and their increase in internet budgeting, has been the core driver of Google’s business model. In the meantime, GOOG dabbles in other spaces, acting as a de-facto incubator for other potential businesses and revenue generators. Google is the present and the future.
When it comes to big tech stocks, I want to be with the innovators, and Google defines what innovation is and will be. With more than $58 billion in cash and investments, and only $2.2 billion in debt, that translates to about $168 per share in cash, giving GOOG stock an effective trading price of $950. The company is slated to earn $52.18 in 2014, so it trades at a forward P/E of 18.2. Analysts have long-term growth pegged at about 15%, and the company’s FCF continually increases year over year. I think GOOG stock is a good buy here, and not overvalued.
Lawrence Meyers does not presently own any security mentioned, but intends to open long positions in AAPL, GOOG and AMZN in the next thirty days.