Google Could Surprise in 2013
Tyler is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Technology is an area that is constantly developing new items, ideas, and patents. Some companies are struggling to innovate rapidly enough to keep consumers happy, but others are setting all-time records. Google (NASDAQ: GOOG) recently became the first tech company to break the $800 per share mark, but will it reach $1,000 in 2013?
Apple (NASDAQ: AAPL) is hovering around its 52-week low, and some believe the stock will dip even lower. The company shows a solid P/E of 10.19 with 64% institutional ownership. I don't know many people who would try to argue the success of a company whose stock has risen 6,000% in the past decade. Revenues have grown from just $6.2 billion to a remarkable $156.5 billion annually since 2003. Not only have they increased revenues, but Earnings Per Share (EPS) have increased approximately 44,150%. The company's gross margins have increased from 27.5% a decade ago to 43.9% in 2012.
Like Apple, Google has had a very successful run, but not nearly as dramatic. Google shows a P/E of 24.56 and 5% more institutional ownership than Apple. Although the stock hasn't kept pace with Apple, it has still risen an impressive 695% since 2003. Gross margins have risen from 57.3% to 58.9% and EPS have risen approximately 7,881%. None of these figures match Apple's unprecedented success, but the company is still as solid as ever. Since the company went public in 2004 revenues have increased by approximately 3,423%.
Both companies have/will release new products in 2013. Google recently released their first laptop, the Chromebook Pixel, and are set to release their new Google Glass for under $1,500 according to Google News. Apple Insider recently discovered a patent from Apple explaining the long rumored iWatch, and are rumored to release other new items including new iPad's, the iPhone 5S, and maybe even an Apple TV.
Many analysts are expecting Google to surpass the $1,000 mark in the next twelve months. When I first saw this news, I uttered under my breath, "No way. That's not possible." I still question the possibility, but after a few very quick calculations, I realized it could happen. Google's stock has already increased over 10% YTD. With these new releases, it is not out of the question for an additional 25% increase in the next ten months. That would be a total increase of 35% in 2013 - just 4% more than last year.
These companies don't appear to be in trouble, but there are some tech companies that are struggling. Hewlett-Packard (NYSE: HPQ) does boast more institutional ownership than both companies at 79%, but its EPS is a dismal -$6.55. The company is losing nearly $7 per share, and gross margins have decreased from 26.3% to 23.2% in the past decade. Most figures show the company to be struggling at the present time. In fact, the stock has fallen over 32% in the past year.
The Foolish Bottom Line...
Apple has not met the media’s expectations which has led to the stock being down in recent months, but the company still appears to be in great shape moving forward. Virtually every metric is yelling "buy!" unlike those of Hewlett - Packard. While I expect Apple's stock to recover, I don't see it reaching $1,000/share any time soon.
Google is doing a phenomenal job keeping shareholders happy right now, and shareholders hope the company will meet some analyst’s expectations of $1,000/share by the end of the year. I'm not predicting that it will happen, but it is, by all means, possible.
tlwofford has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple and Google. 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!