Google Shares Dip, Possible Buying Opportunity
GOOG’s sell-off today seems unwarranted. The stock’s currently under $527 after hours. If anything, their position has been strengthened by the MicroHOO debacle. Growth is still strong like bull, especially internationally. Youtube and G’s Enterprise Apps are still in their infancy, tons of potential. Yet the stock is down 4% amid a huge tech sell-off.
So I put my modest monetary resources where my mouth is today. Bought a few more shares of Google at $529 towards the end of the day. It’s just too cheap. Their estimated P/E for 2009 is just 21. Even if earnings dissapoint a bit, the PEG (price/earnings to growth) will probably still be ridiculously low. A PEG ratio of 1 is considered reasonable, while 2 would indicate a very lofty valuation. Apple’s PEG ratio, for example, is currently 1.43. They command a premium because their earnings growth is excellent. Google is growing like crazy too (and arguably more sustainably). But their PEG ratio is only .97.
On top of all that, I think Google can beat their long-term expectations. Major Adwords innovations like Conversion Optimizer, Website Optimizer, Doubleclick integration, and other improvements will eventually have a major impact on earnings. Plus, unlike Yahoo & Microsoft, Google is focusing on long-term advertiser satisfaction. They’ve shown that they’re willing to sacrifice short-term earnings to provide greater value to their clients. That’s just one example of steps Google is taking to ensure advertisers are happy.
Anyways, I think Google’s a good bet to ride out these horrific financial times.