Last week, it was announced that Internet giant Google (NASDAQ:GOOG) would be purchasing leading mobile service provider Motorola Mobility Holdings (NYSE:MMI). News of the $12.5 billion acquisition provided a positive boost to the markets, which still were reeling from previous weeks’ volatility.
The truth is, big acquisition news often puts the markets in a good mood. And when the news involves big-name companies like Google and Motorola, investors pay even more attention. However, even with the promising takeover of Motorola, GOOG remains a C-rated stock according to me.
It’s natural to want to get in on big-name stocks, but it’s important to remember that just because a company’s name carries popular brand recognition, it doesn’t mean it’s a strong stock to invest in. So today, we’re going to look at a couple of big-name stocks worth buying and one you should stay away from.
Apple: A Stock You Want to Take a Bite Out of
If you’re looking for a technology play that holds its value in virtually every market environment, then Apple (NASDAQ:AAPL) could be the position for you. The maker of some of the world’s most popular gadgets — including the iPhone, iPad and Macintosh operating system — Apple is one household name that is worth its reputation.
I realize the $350-plus asking price per share might be more than you’re accustomed to spending, but I assure you the stock is well worth the price tag. AAPL is expected to pull in 80% growth this year alone. Just take a look at the chart below detailing Apple’s potential growth. It’s obvious that this well-established company is a great long-term investment.
Baidu: China’s Google
If you follow big happenings in the Internet world or big business moves in China, then you’ve probably heard of Baidu (NASDAQ:BIDU). If the name still isn’t ringing a bell, think of the company as China’s equivalent of Google. Baidu operates the largest Chinese internet search engine.
The stock has experienced amazing growth over the past few years. In the nearly two years since I recommended my Blue Chip Growth subscribers buy BIDU, the position has brought in over 250% in returns! And with several more expansion projects in the works, including helping bring the popular social media site Facebook into China, there is plenty of growth left for BIDU.
Looking at Baidu’s projected growth for 2011, compared to its industry and the technology sector as a whole, it’s clear this is another strong investment opportunity.
Don’t Count on Cisco in the Tech Sector
As I’ve already explained, not all big-name stocks like Apple or Baidu are worth owning right now. Some like Cisco (NASDAQ:CSCO), for example, might sound like a good buy but simply aren’t making the grade.
Cisco is a major producer of IP-networking and communications products. When the company puts something out in the media, people listen. In fact, it was Cisco’s warnings of slowed production and a downturn in demand that have led to recent drops in the technology sector as a whole. Cisco might be a major player in the technology field, but it’s important to remember that it doesn’t set the standard for everyone else.
For the past six months, CSCO has been an F-rated stock, and for the six months prior to that, it has been D-rated. The company has experienced poor sales, operating and earnings growth. The company has managed to meet analyst estimates recently, but it also has been forced to lower company expectations. This is something you definitely don’t want to see from an investment.
