One Tech Stock To Buy And Hold For The Long-Term
Maxwell is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
There is a great deal of debate today in the investment community regarding which direction Google's (NASDAQ: GOOG) shares will move in both the short and long-term. Yet, the stock continues to hit all time highs, with the production numbers and financials to back it. In this article, I will explain why Google will continue its upward momentum and reward investors along the way.
Recent positive developments
Google recently hit the $800 mark, following a report of possible Google retail stores being in the works. These stores are rumored to provide a display of the company's consumer electronics products, a move that puts Google in direct competition with the extremely popular Apple store.
In early 2013, Google announced better than expected fourth quarter 2012 numbers, due in large part to the company's continued growing market share of its Android ecosystem. The company presently trades at roughly 20 times its earnings estimates for 2013, which pales Apple's 10 times trading at its 2013 estimates.
Another factor that has helped to add positive investor sentiment for Google is the company's continued strength in the area of online search and display ads. This success could be in part due to lessened regulatory concerns. Paid clicks have helped to drive Google's market share as well, which increased by 24% over the past year. This factor tends to represent a very healthy advertising ecosystem.
Google's higher market share in the mobile search market, in comparison to the PC search area, is also helping to provide additional value for the company's shareholders as mobile advertising also continues to gain share for Google.
In addition, as far as tangible products go, according to comScore, the company's Android OS represented more than 30% of the overall market in the United States for smartphone sales. Google also has posted solid sales growth for its tablets, the Nexus 4/7/10 and the Chromebook, giving the company a combined revenue from Google Play and hardware of just under $2.5 billion in 2012.
In 2012, Google acquired Motorola Mobility, which also helped to increase hardware sales, even though Google ended up spinning off its Motorola Home division to Arris, a broadband communications giant, for just over $2.3 billion. Although the shares are trading at or near their all-time high, it is anticipated that share price will continue to rise over the next 12 months by roughly 4.4%.
In a move to increase shareholder value, Yahoo! (NASDAQ: YHOO) has begun to do away with many of its products that are considered unsuccessful, including its BlackBerry app, Yahoo Sports IQ, Yahoo App Search, Yahoo Message Boards, Yahoo Clues, and Yahoo Updates API. This move is due in large part due to the company's new description of being "a global technology company focused on making the world's daily habits inspiring and entertaining." Investors feel that this "less is more" attitude from Yahoo is positive. Though some of her moves have appeared a bit controversial, ever since Yahoo's new leader, Marissa Mayer, took over at the company, Yahoo has been seen in somewhat of a new light. One of Mayer's biggest goals has been to position Yahoo for long-term growth, a move that will ultimately benefit both the company and its shareholders. With a P/E ratio just below 6.9, along with earnings per share of $3.28, Yahoo will likely continue to reward its shareholders in the short-term.
Microsoft (NASDAQ: MSFT) is currently also poised for some share growth, while continuing to pay a nice dividend to investors as well. With a payment of $0.92 per share, the company's dividend yield is holding at 3.3%. The company is also holding 28% of cash per share on hand. One thing investors may want to be mindful of is a pending potential fine that may be charged to Microsoft by European Union regulators. This comes as a result of alleged violations over giving users a choice of web browsers. Microsoft has a present P/E ratio of 15.30, along with fairly strong earnings per share of over 1.8. While currently trading near its 52-week low, over the next 12 months, shares of Microsoft are expected to rise by approximately more than 18%.
Another potential mover in terms of short and long-term growth is Amazon (NASDAQ: AMZN). Year-to-date for 2013, the company's shares are up over 5%. Strengths for Amazon can be seen in a number of areas, including its solid cash flow from operations and nice revenue growth. Amazon has been becoming a bigger competitor to Apple, primarily in areas such as music and video, as well as with its MP3 services and Cloud Player coming up against Apple's iTunes. Recently, Amazon announced a new Cloud app that is geared for certain iDevices such as the iPad and iPad Mini devices. This app will allow users of iPads, for instance, to directly stream from their Amazon cloud library, rather than having to load music onto their devices in order to stream it. Amazon has also announced an update to its Kindle app for iPhones and iPads.
The bottom line
Given the forward momentum, Google's shares have continued to perform nicely of late - even with a price above $800. While Google's shares no longer seem to represent a compelling buy, they are certainly a nice addition and should be held on to for the long-term.
Even though there may be some short-term downside due to macroeconomic issues, Google is very well positioned to weather nearly any type of downfall, especially in light of its innovative business model coupled with its continued strong balance sheet.
StockCroc1 has no position in any stocks mentioned. The Motley Fool recommends Amazon.com, Facebook, and Google. The Motley Fool owns shares of Amazon.com, Facebook, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!