|
Google (GOOG) Returns 30% in Three Weeks
Published: May 8, 2008
As
editor of our
Half-Priced Stocks newsletter, my job is fairly
self-explanatory -- find stocks trading at just half their fair
value. Of course, that's usually easier said than done, and
getting the market to agree with you and drive the stock up to
what it's really worth is even harder.
However, sometimes things go exactly according to plan. That was
the case last month, when I pointed out a few reasons why
investors might want to take advantage of the precipitous drop
in Google (Nasdaq: GOOG, $581.29). If you're not a
subscriber, you can read an excerpt of that write-up in the
April 14th edition of Investor Update just a few
weeks ago.
You might not consider Google to be a value stock, and neither
did I, until signs of slowing click volume caused the stock to
tumble from $750 to around $400 in a matter of weeks -- wiping
out about 46% of the firm's market cap. At the time of my
profile, the stock carried a moderate forward P/E of around 19
and was sitting at $450 -- well below my fair value of $613.
Of course, after seeing disturbing data from companies like
ComScore, many were quick to write off Google as over the hill
and ailing. But it seemed to me that Google's wounds were at
least partially self-inflicted, as the company's efforts to
crack down on fraudulent activity would naturally lead to lower
click-through volume. But if Google was finding
ways to feed better leads to its customers, then they would
likely be willing to pay premium prices to Google for them.
With all of that in mind, I saw the downturn as a golden "window
of opportunity." And just three days later, Google silenced the
skeptics with a blowout quarterly earnings report. Revenues for
the quarter were anything but tepid, surging +42% to top $5
billion on a +20% increase in paid clicks. Meanwhile, adjusted
earnings came in at $1.5 billion, or $4.84 per share --
shattering analysts' $4.53 target.
Wall Street responded to the news enthusiastically, sending the
shares soaring $90 after the report. And with investors still
rushing to pile back in, the stock has continued to gain ground
since then, closing Friday at $581.29 -- a gain of nearly +30% in
less than three weeks.
In this month's
Half-Priced Stocks newsletter, I zero in on another
highly undervalued company that, like Google, has been unfairly
beaten up by investors in recent months because of overblown
concerns. The company enjoys a monopoly-like hold over its
industry, is upgrading to a new production facility that will
slash electricity costs by 95%, and has an order backlog of $6.5
billion -- more than triple what it took in all of last year.
Best of all, the stock is trading below book value and at less
than half of its fair value, paving the way for possible
triple-digit gains down the road.
To read my complete in-depth analysis of this exciting company,
I invite you to take a no-obligation test-drive of
Half-Priced Stocks. To learn more, please
visit
this link.
|
Nathan Slaughter
StreetAuthority Staff Writer
|
Income Security
of the Month
Our "Income Security of the Month" for May 2008 invests in
a fast-growing overseas market that doesn't get much exposure in the
mainstream financial press. And although it typically makes enormous
annual dividend payments -- it has paid an average dividend of 24.5%
per year over the past five years -- this fund is perhaps most
appealing for its total return potential. Specifically, the fund has
delivered total returns of +297.3% since 2003, and
it ranks in the top 10% of its category over the past decade.
|
Top
10 Stocks for 2008!
Since we began publishing this report back in 2003, the picks we've
featured have consistently beaten the broader market -- delivering average
gains of +21.3% per year and outperforming the S&P by a nearly
2-to-1 margin. Act now to reserve your copy of our newest report -- Top
Ten Stocks for 2008. |
|
|
