Is Google Still a Good Investment in 2012?
Google is a good buy for many reasons. Let me explain each one. Here are 8 good ones:
1. The classic “buy low sell high” mantra applies. Google is quite cheap in terms of P/E. I don’t think I need to explain more there.
2. Google renewed their China licence. That means they are finally smartening up and learning to work with different governments instead of trying unsuccessfully to force their ideals down the throats of other nations. I’m living in China and can see that this is a very smart business decision. It’s not exactly how Google wants things but at least they are trying to negotiate and play ball instead of being out of the China game.
3. Their Android play is going nuts. Android is one of the fastest growing search terms of something that is already highly searched. Check out Google Trends and search for Android and look at the graph. Compare it to almost anything. Apple is considered greedy but Google takes the same cut as Itunes for App sales. Huge money..
4. New sources of revenue that most people are unaware of. Google used to do everything for free and try to put ads here and there. Now they are targeting small companies and even charging for a personalized gmail account system if the company has more than 10 people. I’m involved with a company doing this and happily writing Google a check every month. This is quite new and many investors don’t know about this new revenue source. There is a lot of potential with software for businesses. They will undercut Microsoft but still charge something. They are learning that it doesn’t need to be free to work. Dirt cheap with high volume will be a new model for Google and a major revenue engine.
5. Google + is a lot better than people are saying in the media. There is so much incentive for website owners to use it and promote it as well because of search rankings. It’s pretty easy to see how this can be monetized. It will be a top 3 social media site for sure.
6. They are poised for growth in Mobile and Video. Google is very smart at predicting where the world is going with tech. Apps, Video, Mobile, Social networking. They’ve got it covered and they are now starting to understand that the world is different all over. There is a lot of room for them to grow internationally.
7. They have a lot of money. They make mistakes but they make smart moves that compensate. Youtube was said to be a bad buy at something like 1.65 Billion. Every major buyout comes with risks, but Google isn’t afraid to take the bat off their shoulders. There will be some inevitable strike outs, but expect some grand slams too.
8. Google Chrome Browser is taking off. Google will figure out how to monetize that for sure.
Great buy and hold for at least a few years. I’ll let you know if it overheats but it’s a great stock pick now.