Can you consider Google a "value" play at these prices?
Best Answer
474 points
spider348 answered one year ago …
In my opinion it is headed for the '05 $200 level.
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2222 points
readytoretire answered one year ago …
If you look at its income, it is a bargain at these prices. That said, in todays market, I would not buy the entire position in one bite. The market could easily drive everything (including Google) down more before it stabilizes. It is well positioned to go up as soon as the market heads that way. Its income could be affected as companies cut back on advertising, but it appears that internet advertising will hold up better than other forms.
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3963 points
MNSL answered one year ago …
I agree with both spider348 and readytoretire.
It is better to build positions in stocks with strong support irrespective of types of market and in next rotating sectors. .
4085 points
EthanR answered one year ago …
I agree with Spider. Long term support is around $185. The MACD is still heading lower. I don't think it will hold at current level.
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2183 points
ChaosNantuko answered one year ago …
While i think it will go lower, and now is not the best time to buy, I do believe google would be a "value" play at these prices. Theres a couple reasons for this. For one, google is a fairly "safe" company right now. It has a lot of cash on hand. Its shares currently trade at 276, and it has about 46$ cash per share. This leaves it in a very good position to fund possible takeovers right now, and gives it room to buyout competitors if neccasarry. It also means theres no chance of the company failing, and with all the fear in the market right now, thats a big factor.
The second reason being this; analysts are pegging their earnings growth at approximately 20% per year for the next 5 years. That means their earnings will grow to approximately 2.5 times what they currently are over that time period. The current Price to earnings ratio is 16.5, so the foward 5 yr P/E ratio is 6.63. Realistically, i believe google will have a P/E ratio of at least 14 at the time, so i believe it will at the very least double over the next 5 years. If it does, thats an annual return of 16%. If you plan on holding it for at least 5 years, i'd say google is a relatively safe value play. Granted, if you let it fall another 20% first, then that annual return increases to 21% annually, and i think theres a strong chance it falls over 20% from where its at now, but if your a buy and hold investor, I'd take a serious look at google, and start scaling into your position soon (perhaps one third now, one third if it drops 15%, and one third if it drops 30% from current levels).
One thing to remember is, at this point in time, almost any stock (aside from energy, financials, biotech, and commodities - and i'm very long term bullish on energy but its a very risky play) would be a value play if your willing to wait 5 years or more. That wouldn't mean i'm a buyer quite yet. I'd rather wait for the market to fall another 20-25% first.
