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Message
GOOG trading at 52 wk low
Posted on 11/13/08 at 9:21 am
Posted on 11/13/08 at 9:21 am
Anyone think this is a good pick up? Seems like google isn't going anywhere...I realize it may go down further before it goes back up, but c'mon...Google is gonna go back up.....right?
1
Posted on 11/13/08 at 9:49 am to Joe
Uh, Google was terribly overvalued and internet advertising is still overpriced. The P/E is currently almost 18 and it's not like Google is going to grow their market in this sort of economy. I predict it drops a good bit more and then hangs around there for a long, long time.
Posted on 11/13/08 at 10:13 am to tom
quote:
Google was terribly overvalued and internet advertising is still overpriced
+1
They dominate search, and I think they will dominate mapping in time, and they are very much becoming Corporate Big Brother, but even with all of that power and dominance they are finding it hard to monetize all the different projects they have. I think for quite a while adwords will remain the main driver of revenue. We'll see if Android allows them to gain a new revenue stream, but my guess is the phone companies will be the ones making money on Android ringtones and media, and in general I think Internet advertising in the mobile market is still a bit of a pipe dream. The iPhone is a big step forward but it's still not the same as surfing the web and if anything people surfing the web on phones are calling for fewer ads (see the iPhone app thread on the help board).
Posted on 11/13/08 at 10:27 am to TigerinATL
GOOGLE gets 99% of its revenue from online advertising where it has in excess of 60% of the market share. So forget about all of these side projects they have. They have posted rising free cash flows each of the last five years in spite of the non-profit generating side projects and, using even conservative discount factors and growth estimates, can be valued at $500 to $600 a share based on the trailing twelve months free cash flow. They have an outstanding corporate culture that has allowed them to sky rocket to the best in the business. They are way underpriced, and I have been buying as much of their stock as I can afford.
Don't get caught up in this technical BS of beta and efficient market theories. They are a solid business that you can buy cheaply now because the entire market is down.
Also, for those worried about the economy hurting them, they get paid when someone clicks on an advertisement on one of their 10,000+ network member websites. Where do you think companies will allocate most of their advertising budgets to? The one where they only get paid if it works and, therefore, has the best cost-benefit. The bad economy will actually give them more business.
My recommendation: BUY!
Don't get caught up in this technical BS of beta and efficient market theories. They are a solid business that you can buy cheaply now because the entire market is down.
Also, for those worried about the economy hurting them, they get paid when someone clicks on an advertisement on one of their 10,000+ network member websites. Where do you think companies will allocate most of their advertising budgets to? The one where they only get paid if it works and, therefore, has the best cost-benefit. The bad economy will actually give them more business.
My recommendation: BUY!
Posted on 11/13/08 at 10:35 am to Nicodemus
quote:
where it has in excess of 60% of the market share
You sure it's not higher than that? I follow google as a company, not a stock, so I could be wrong, but I'd assume that AdWords growth and dominance should already be reflected in the stock price.
Posted on 11/13/08 at 10:41 am to TigerinATL
quote:
I'd assume that AdWords growth and dominance should already be reflected in the stock price.
Fortunately for us, it is not. You are assuming that the market is efficient. Luckily for us value investors, there are times when it is woefully inefficient, such as now. Since the entire market is down, people have over sold Google's stock.
Remember what Warren Buffett says, "Price is just what you pay. Value is what you get." The price is $300, but the value is $500. Easy decision. Also, even the most conservative analyst's estimate that I have seen, which came out earlier this week, values the stock at $490.
So, no, the growth in revenue and earnings is not currently reflected in the price.
Posted on 11/13/08 at 11:46 am to Nicodemus
Take a look at Whole Foods stock. It's really low right now. 8.78
Google does not have much reward for the amount you have to put in.
Google does not have much reward for the amount you have to put in.
Posted on 11/13/08 at 11:53 am to BayouBengal27
quote:
Take a look at Whole Foods stock. It's really low right now. 8.78
Google does not have much reward for the amount you have to put in.
Please read this board for a few months before posting anything. This comment is absolutely absurd. Absolute share price is a terrible way to purchase stocks. You have to look at earnings, growth, assets, ROE, etc, in relation to current stock price.
I wouldn't touch google or whole foods with a 10 ft pole right now. Whole foods over expanded and will suffer a lot in this economic downturn.
Google will too, advertising expenditures in a downturn always go down. Yes, they may beat out rivals but its going to drive down overall ad rates. Maybe they might do well if they continue to see structural trends towards internet advertising over traditional media. But those traditional media advertising rates will plummet faster than internet advertising, since we have soooooo much excess capacity to deliver ads.
Posted on 11/13/08 at 1:05 pm to MileHigh
I can see whole foods losing significant business to "regular" grocery stores as the economy continues to decline. Less people will want to pay a premium for their goods.
Posted on 11/13/08 at 1:34 pm to MileHigh
quote:
I wouldn't touch google or whole foods with a 10 ft pole right now. Google will too, advertising expenditures in a downturn always go down. Yes, they may beat out rivals but its going to drive down overall ad rates.
You are looking too much to the short-term. In the long-term, Google will reap great benefit from more companies turning to them now. Yes, they may see lower revenue, but that will reverse when the economy picks up. When I buy a stock, I don't plan to sell for at least 5 years unless something drastic happens.
Also, analysts have priced in the economic downturn into their valuations of Google and still value it at around $500 on average. To me, it is a very easy decision.
They have ROE in excess of 20% each year, solid growth, great free cash flow, no debt, high current ratio....I can go on and on about why they are a great long-term buy.
Posted on 11/13/08 at 1:39 pm to Nicodemus
quote:
analysts have priced in the economic downturn into their valuations of Google and still value it at around $500 on average. To me, it is a very easy decision.
I am not wise one way or another on if Google is a good buy, but all of these analyst that you see on tv and read about in Fortune/Money/Forbes just seemed to be paid hacks. They almost never get things right when it comes to downturns in the market.
Posted on 11/13/08 at 1:50 pm to Nicodemus
I am not going to disagree that they are in a good position. They are. They have great numbers, and growth will most likely continue in a downturn.
Ok, you made my point for me. Why buy now? Why not let them see those lower revenues, see the stock decline, then pick up?
I will definitely be in a buying mode when I think we are getting close to the bottom, but I don't think that is yet.
I am eying GE, Aapl, and T for eventual purchases. Both GE and T have are not going to disappear, but their valuations have been decimated in the last few months. They will overshoot them on the downside. I am worried
Aapl is more speculative. They also have been beaten up, but this downturn is not going to destroy everyone's income.
My purchase targets are $8 for GE, $60 for aapl, and $15 for T. Yes, I think we will hit those lows.
And I might take JT's advice for convertibles as opposed to outright share purchases.
quote:
Yes, they may see lower revenue, but that will reverse when the economy picks up.
Ok, you made my point for me. Why buy now? Why not let them see those lower revenues, see the stock decline, then pick up?
I will definitely be in a buying mode when I think we are getting close to the bottom, but I don't think that is yet.
I am eying GE, Aapl, and T for eventual purchases. Both GE and T have are not going to disappear, but their valuations have been decimated in the last few months. They will overshoot them on the downside. I am worried
Aapl is more speculative. They also have been beaten up, but this downturn is not going to destroy everyone's income.
My purchase targets are $8 for GE, $60 for aapl, and $15 for T. Yes, I think we will hit those lows.
And I might take JT's advice for convertibles as opposed to outright share purchases.
Posted on 11/13/08 at 1:54 pm to MileHigh
if AAPL sees 60, it will also see 25. IMO.
Posted on 11/13/08 at 1:56 pm to Nicodemus
quote:
I can go on and on about why they are a great long-term buy.
There's really only one reason. They took everyone in the search engine market by surprise, left them in the dust, and kept running. IMO not even MicroHoo! would have had a shot to make up much ground on them had that deal gone through. As long as we search for things using keywords, Google will rule search and internet advertising. It will take a technological revolution to unseat them. The most likely candidate I see is a shift to a speech recognition computer interface. This would still technically be a keyword search, but if for example car GPS's and phones shift to this, Google could well get locked out of emerging search markets.
Posted on 11/13/08 at 1:57 pm to footballislife
quote:
I am not wise one way or another on if Google is a good buy, but all of these analyst that you see on tv and read about in Fortune/Money/Forbes just seemed to be paid hacks. They almost never get things right when it comes to downturns in the market.
There is probably a lot of truth to that. However, I am not a paid hack, and, for my own personal investment, I have researched and valued Google at about $500 using the discounted free cash flows method, which is by far the best method for valuing a company. Warren Buffett uses that method as well as most successful value investors.
I may not be an "expert analyst", but I am a CPA, have passed the first part of the CFA exam and have read a considerable amount of value investment books. It makes me feel better about my valuation that most analysts value it within the same range.
Since it is for my personal portfolio, I am extremely meticulous in my research. I only mentioned the analysts' opinions to lend credence to my argument that it is a great long-term buy.
Posted on 11/13/08 at 2:00 pm to MileHigh
quote:
Why buy now? Why not let them see those lower revenues, see the stock decline, then pick up?
I buy now because I know it is undervalued now. No one can successfully consistently time the market. So why bother trying to time the market?
The reduction in revenue as a result of the economy is already built in the current valuation. If the reduction in revenue actually occurs, then the value will not change. Nor should the price much because people expect the reduction in revenue to happen.
Posted on 11/13/08 at 2:04 pm to Nicodemus
quote:
No one can successfully consistently time the market. So why bother trying to time the market?
B.c there is a chance that you will lose a lot of money. Volatity is quite high right now, for good reason, any play is borderline speculative at the moment.
Posted on 11/13/08 at 2:05 pm to Nicodemus
quote:
No one can successfully consistently time the market.
Wrong.
Posted on 11/13/08 at 2:07 pm to Colonel Hapablap
quote:
if AAPL sees 60, it will also see 25. IMO.
Quite possibly. discretionary consumer goods will be hit pretty hard. But I think Aapl sticks around, and the winners will get bigger slices of the pie.
bit players like creative can kiss their butts goodbye. Its going to be Apple and MSFT.
Posted on 11/13/08 at 2:09 pm to MileHigh
quote:
B.c there is a chance that you will lose a lot of money. Volatity is quite high right now, for good reason, any play is borderline speculative at the moment.
You may have an unrealized loss in the short-term if the price drops further, but I know that if I buy now that the price will ultimately equal the value of $500, so I will have a large realized gain.
How can anyone guess with any accuracy whatsoever how low the price will go? One thing I learned while studying for the CFA exam is that study after study has shown that timing the market with consistency is impossible. So there is no point guessing when the trough is if you know it is way undervalued now. That is why Warren Buffett, Peter Lynch, and countless other value investors are so successful. Short-term volatility is meaningless to them. Only the long-term value counts. I have invested 0% of my portfolio based on speculation and it will always be that percentage.
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