Google Continues to Impress - How High Can It Go

Written by The Dividend Guy on April 20, 2006

Internet search engine giant Google Inc. reported a 60 per cent rise in first-quarter profit Thursday and a 79 per cent jump in sales as on-line advertising continued to expand at a rapid pace, sending the stock higher in late trading.

The stock closed up $4.50 to $415 per share. This is one of those stocks that I did not buy, as I got suckered into the $200 per share is too much, $300 per share is too much, and now the $400+ per share is too much. But there must be something there for all these people to be bidding the stock higher and higher.

The thing that gets me is that it is trading at a P/E of 79.8 - which is way higher than the average P/E ratio for the S&P 500 (although I could not find the exact figure). To me that is overpriced - investors are tacking on a huge premium for Google’s potential earnings. Yes, the company has done well, and is doing well, but that is a huge premium.

I do not regret not buying it - although it would have been nice. Not my kind of risk though.


Recommended: ING DIRECT makes $aving money simple! Open your account online today and start earning 3.00% variable APY. No Fees and No Minimums!

del.icio.us| Digg| Furl| Reddit| Google| StumbleUpon| Technorati| Help|

2 Comments so far

  1. carolina_pirate April 22, 2006 12:19 pm

    Google will go as high as people will pay. This stock is going to end badly.
    The people who are going to be left holding the bag will be normal everyday americans who could care less about the stock market.

    The S&P showed they didnt not care about their investors when they added this baby to the 500 index. Now, everyday americans bought this sucker at high inflated prices and they will be left holding the bag.

    On the flip side, google has awesome management who are not fools. They have been selling stock into this strength all along. Print the stock as fast as we can boys…before this ship hits the iceberg!

    This stock is priced to perfection. When it misses earnings by 1 penny….this stock will get hammered….because its priced to perfection. 2 bad quarters and the blood will really flow.

    http://thegreedypirate.blogspot.com/

  2. Average Joe April 23, 2006 10:26 pm

    “But there must be something there for all these people to be bidding the stock higher and higher.”

    Remember the dot com craze. Maybe this stock is worth it. Maybe it isn’t. But the people bidding it up probably don’t have a clue.

    I remember thinking that $80 was too high! *chuckle* Oh well. I’ll stick to the dividend payers.

POST A COMMENT

If you would like to make a comment, please fill out the form below.

Name - (Required)

Email - (Required but not published)

Website - (Optional)

ENTER YOUR COMMENTS BELOW






Student Loan

www.financialwebring.com