One Man’s Journey
Stock Market Analysis Video
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This week, Google (GOOG) announced that it was speeding up its search results so that “instant” information will display as you type. Google said the new feature was in response to the fact that people read faster than they type and the new super quick search results will allow users to adjust queries more rapidly and allow them to type less.
During the announcement, Google said that an average searcher spends nine seconds entering a query and 15 seconds looking for answers. Google Instant will save two to five seconds per search and 3.5 billion seconds per day.
You’ve likely already noticed that Google has a “suggested search,” but the Instant Search is like that on steroids. Typing in even a single letter yields results. I’ve used it several times since its debut on Wednesday and while it was a bit overwhelming at first, I’m already getting used to it.
Instant search is just the latest in a long line of incredible technological advancements from Google, which has continuously revolutionized the way we use the Internet since its founding a little over a decade ago. (Heck, the company name, Google, has even become a verb!)
And Google’s stock has reflected this evolution. From its initial public offering at $85 per share in 2004 to its high of over $700 in 2007, the stock has long been an investor favorite. It got tripped up (with the rest of the market) in 2008, but has been recovering since.
The stock currently trades around $450, not your typical price level for a value stock recommendation, but that’s exactly where you’ll find GOOG in the Cabot stable of newsletters: as part of the Wise Owl Model in Cabot Benjamin Graham Value Letter.
Editor J. Royden Ward recommended Google in June with a Maximum Buy Price of 482.53. This is what he wrote then:
Is it Undervalued? GOOG shares now sell at 18.2 times our 12-month forward EPS forecast, which is low in comparison to the 20% EPS growth that we foresee during the next three to five years. We expect Google’s stock price to increase to our Minimum Sell Price of 818.24 within two to three years.
Company Profile: Google aims “to organize the world’s information and make it universally accessible and useful.” Thousands of companies use Google’s AdWords and AdSense programs to promote their products and services on the web using advertising relevant to the information displayed on search pages.
Founded just 10 years ago, the company’s sales now exceed $25 billion with profits of $7 billion. The balance sheet stands out with no debt and $26 billion of cash. The company pays no dividend. In recent news, Google ceased operations in China because of China’s censorship of free speech, but the company derived less than 1% of its revenues from China.
Outlook: Sales increased 18% during the 12 months ended 3/31/10 while earnings per share jumped 30%. We expect sales growth of 13% and EPS growth of 20% during the next 12 months and in future years. Google will continue to benefit from increasing Internet use and the effectiveness of online advertising. Huge opportunities exist for advertising on smart-phones and Google’s cloud computing.
For those seeking value (with a splash of growth), Google is a great investment pick.
Click here to learn more about Google and other top value stocks recommended by Cabot Benjamin Graham Value Letter.
Another headline from the New York Times caught my eye this week, “Washington State Man Drives 1,400 Miles Without Refueling.” My interest was piqued (to say the least), so I just had to read the whole story.
The basics are that a Washington state man drove from the Canadian border to the Mexican border along West Coast Interstate 5 in a home-built car that he estimated could drive 1,400 miles on 14 gallons of diesel fuel.
Craig Henderson, owner and driver of the vehicle, called the Avion, not only succeeded, but actually beat his own goal. The car used a mere 12.4 gallons of fuel on the trip, for an average of 119.1 miles per gallon!
I don’t know about you, but I’d love a car that fuel-efficient. Unfortunately because the car was homemade, I doubt we’ll see something like it on the market any time soon.
There are, however, several companies working to bring more fuel-efficient cars to market, like Tesla Motors with its Roadster, the Chevy Volt and the Nissan Leaf, among others. And hearing stories like Craig Henderson’s gives me hope that soon we’ll see truly efficient cars priced well being adopted at wider rates, something good for both the environment and our wallets.
Every month, Cabot Green Investor features the top stocks in the Green sector, like those focusing on making more fuel-efficient vehicles. A new issue came out on Thursday featuring two red-hot solar companies. Don’t miss these new recommendations!
In this week’s Stock Market Analysis Video, Cabot China & Emerging Markets Editor Paul Goodwin says it's been another good week, but not a decisive week, in the stock market. The market opened well on Friday when good news in the form of diminishing new claims for unemployment showed up. Paul discussed the cloud computing industry and these stocks: Acme Packet (APKT), Aruba Networks (ARUN), Netflix (NFLX), Sohu.com (SOHU) and China New Borun (BORN).
Watch the video.
In case you didn't get a chance to read all the issues of Cabot Wealth Advisory this week and want to catch up on any investing and stock tips you might have missed, I have links below to each issue.
Cabot Wealth Advisory 9/7/10 – Up, Up and Away
On Tuesday, Timothy Lutts wrote about the obesity epidemic in the U.S. and what he would do if he were president to eliminate this problem. Tim wrote about the improving stock market situation and talked about one of his favorite stocks. Featured stock: Netflix (NFLX)
Cabot Wealth Advisory 9/9/10 – When Stocks Go Over the Falls
On Thursday, Paul Goodwin discussed what to do when good stocks go bad, as happened with China Agritech (CAGC) this week. Paul also discussed the history of some of the world’s most popular drinks and a young Chinese beverage company. Featured stocks: China Agritech (CAGC) and China New Borun (BORN).
Until next time,
Editor of Cabot Wealth Advisory
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