Google: This is Almost too Easy
Tim is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Okay already, the employment figures disappointed, Europe looks downright gloomy and both companies and countries seem to be fighting for a place in line to sue Google (NASDAQ: GOOG) for pretty much anything and everything. But trading in the high $560s to low $570s a share? Value investors wake up - if you’re not salivating already you should be – this is just too easy.
Revenue from Everywhere
What’s made Google such a force was their focus early on to broaden their lines of revenue beyond search and advertising – and they’ve succeeded with flying colors. The Android OS sits right alongside Apple’s (NASDAQ: AAPL) iPhone as the leader in the industry. It’s been so successful you can’t help but wonder if the rumors about Facebook entering the smartphone space (BIG mistake, but that’s another story) were – at least to some extent – driven by Google’s success. Now with the completion of the Motorola Mobility acquisition, the hardware side of the market is next on the target list.
Then there was the Brandcast a few weeks ago – Google’s unveiling of the new and improved YouTube functionality. Not only does YouTube allow marketers a better opportunity to target audiences – folks like AT&T, GM, Toyota and Unilever are already on board - the expanded offerings should put the fear of you-know-what into Netflix (NASDAQ: NFLX) shareholders. The onslaught of competition has been Netflix's achilles heel since its inception, and now it's coming fast and furious. Google’s already signed the likes of Jon Avnet – the maker of acclaimed movies Black Swan and Fried Green Tomatoes – to generate YouTube-specific, quality content.
Somewhat lost in the shuffle seems to be Google+. Launched just a year ago, the networking service already has about 100 million users and is in direct competition with Facebook. How long before Google+ becomes Google++ (or some clever derivative thereof) and begins targeting the business networking marketplace, ala LinkedIn (NYSE: LNKD)? If Google’s proven anything over the years it’s that CEO Larry Page and the team are very good at entering and subsequently dominating new markets. And with a built-in client base of businesses using Adsense and other Google business-related tools, the transition would seem to be a natural. LinkedIn - to their credit - is better positioned to handle competition than Netflix was/is, but when the big boys enter the room it's impossible not to notice.
And let's not forget the bane of tech geeks everywhere - the Cloud. Okay, not all tech geeks, but it's fair to say many have been slow to buy in. Regardless, by virtually all accounts Cloud computing is growing by leaps and bounds. Naturally Google was in early and offers a host of more advanced solutions, including an app engine and storage capabilities that allow for easy scalability – which is what the Cloud is all about. Most users of Google docs - one of the earliest forays into Cloud technology - probably aren't even aware they've joined the Cloud crowd.
Today
Investing in Google when it's trading in the high $560s to low $570s per share is like taking candy from a baby. Have even a couple of months to buy and hold? When – not if – Google is back to its happy place of about $610 to $615 a share - which is still a value - today’s investors will pocket the easiest 7% gain around.
The company continues to crank out cash quarter after quarter, adding to what is already a mountain of money on the balance sheet. Now – with the last several days’ downward pressure – Google is one of the least expensive investment options in the industry. That sound you hear is the snicker of value investors everywhere trying to control the urge to jump for joy.
timbrugger has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. 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.If you have questions about this post or the Fool’s blog network, click here for information.
