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.
By: George Leong
Posted: February 7, 2013, 7:56 am
We believe the stock market and the economy have been propped up since 2009 by artificially low interest rates, never-ending government borrowing and an unprecedented expansion of our money supply....