Google (GOOG) stock is having a bad year, but has it been bad enough to make GOOG a bargain buy?

GOOG is essentially at break even for 2014 even as the broader market is up more than 10%. Against the more appropriate benchmark — the Nasdaq 100 — Google stock is lagging by 16 percentage points.

It seems no one loves GOOG this year.

To be fair, it’s been a tough year for big web stocks like GOOG. Amazon (AMZN) is down more than 22% for the year-to-date. Ebay (EBAY) is off about 1%.

Of course, unlike Amazon, GOOG is profitable. Google stock also has a much more reasonable valuation than Amazon, which trades at stratospheric valuations.

Google stock is partly being punished because it’s a cyclical growth stock at the wrong time in the market cycle. This bull has been running for so long that it’s time for less cyclical value stocks to take market leadership. Indeed, the consumer staples sector of the S&P 500 is up 11% for the year-to-date, while the consumer discretionary sector gained less than 2%.

But there are company-specific reasons for Google stock’s crummy performance this year as well, but this could all be good news for new money. After all, the point is to buy low, and Google stock hasn’t sunk to current levels since spring.

As always, however, that doesn’t mean GOOG can’t fall farther. So should you buy Google stock? Let’s look at some of the pros and cons:

Google Stock Pros

Stabilizing Prices: As much as GOOG likes to get its hands in everything — from mobile to shopping to cloud services — its bread-and-butter is still advertising. That’s why the steady decline in cost per click has investors worried. Prices for ads are getting cheaper. However, in the most recent period, CPC fell 2%, a big deceleration from the 6% drop in the previous quarter.

Cloudy With a Chance of Profits: Perhaps the biggest trend in information technology these days is the emergence of the cloud as a must-have service among enterprise customers. GOOG was late to the game in renting out the vast resources it commands in processing power, and it’s still playing catch up to Amazon. On the other hand, that also means Google has lots of growth in cloud to look forward to.

Dreaming of Dividends: Tech companies hate initiating dividends because it signals to the market that the days of really heady growth are over. But some investors in Google stock still want the company to pay a dividend. Heck, even Apple (AAPL) threw in that towel a couple of years ago. With $60 billion in cash on its balance sheet and annual cash flow of more than $4 billion, GOOG can certainly afford it even as it spends a fortune on hiring.

Google Stock Cons

Decelerating Conditions: As noted, prices paid for ads — or cost per click — has been dropping for a long time, partly as a result of searches moving from the desktop to mobile devices. True, CPC is starting to stabilize, but the trend is still down and that hurts growth in Google’s core business. In the most recent quarter, Google Sites paid click growth fell to 24% from 33% in the previous quarter.

Click to Enlarge Technical Difficulties: One of the scariest things about technical analysis is that even if you think it’s voodoo, it tends to become a self-fulfilling prophecy. That’s bad news for GOOG stock. Shares tumbled through their 50-day and 200-day moving averages about a month ago, suggesting that all the price momentum is to the downside. Even more ominous is that GOOG stock just carved out the sell signal of a death cross.

Valuation: Google may look far more reasonably priced than, say, Amazon or Facebook (FB), but even after struggling all year, it’s still not exactly a bargain. True, GOOG stock looks like a good deal based on its growth forecast. Shares fetch about 18 times forward earnings on a long-term growth forecast of 16%. However, GOOG is significantly more expensive than its own five-year average price-to-earnings ratio. Combine that with lackluster sentiment, and it’s hard to see multiple expansions any time soon.

The Verdict

Google stock remains an outstanding long-term holding, but this isn’t the best time to start a new position. Like Amazon, Google is playing a long game, where it’s investing heavily in the business today to reap even bigger rewards tomorrow.

It sure seems to be working. In the most recent quarter, revenue from complementary businesses like Google Play and Chromecast grew to account for 11% of total revenue. Android is the most popular mobile operating system in the world.

That said, the technicals and fundamental suggest that GOOG stock has some short-term downside ahead of it. The market hates it when it can’t project future earnings with any degree of confidence. That alone keeps a lid on Google stock. Throw in fundamental headwinds like lower CPC and the technical hurdle of hitting a death cross, and Google stock looks it can get even cheaper before the end of the year.

As of this writing, Dan Burrows did not hold a position in any of the aforementioned securities.