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So dominant it’s a verb, Google is the leading internet search provider and uses its proprietary algorithms to offer targeted advertising.
Punch #1This is one of the 20 that I'm picking to go long term with. My reasons: Google has penetrated our lifestyle in nearly limitless ways, is used by almost everyone I know as their home page, has immense cash and political power to maintain its position in the market, and is constantly trying to get more involved with our lives (i.e. tablets). It's very hard to see this company dying away in the next 30 years even. As of right now, the one apprehension I have is the United Nations. Their move to impose an internet tax says it all for me- they wish to control streaming internet more which I believe would negatively effect Google.Some basic statistics on Google that I believe are important:EPS : 32.46P/E : 23.22Sales (5 yr growth) : 23.57PEG : 0.98ROA : 14.60 (above industry)ROE : 17.10 (above industry)Accounts recievable turnover: 7.00 (above industry)Inventroy turnover : 53.60Total asset turnover : 0.60 (above industry)These stats are from the Motley Fool, Google Finance, or Yahoo Finance.By first glance in both a qualitative and quantitative sense, this company seems like a good buy and hold for the long run. At this price, though, I'll be out with real money until it becomes cheaper! I'm interested to see how this pick does 5 years from now.This pick is made in the spirit of the player's, 20punches, idea of picking 20 stocks to go long with. As per his/her quote:"When Warren lectures at business schools, he says, “I could improve your ultimate financial welfare by giving you a ticket with only 20 slots in it so you had twenty punches – representing all the investments that you get to make in a lifetime. And once you’ve punched through the card, you couldn’t make any more investments at all. Under those rules, you’d really think carefully about what you did, and you’d be forced to load up on what you’d really thought about. So you’d do much better." -Charlie Munger
Love what you're doing... I own about 40 different stocks right now, and I feel like I might have overextended myself and will be interested to see your picks and analysis.Would you consider UPS as one of your 20 punches?
Yes, absolutely!Ironically, they were going to be my 2nd punch. Just getting some preliminary research organized before I write a pitch. UPS is a great service, and it's one that could survive well in any economy. IMOAlso researching GEOS and CVI right now (on someone else's recommendation). I'm not sure how I feel about the long term prospects on these two.
In 2008 Google's stock price peaked around $715. The price is now around $780 BUT earnings in 2008 were under $20. We'll Google earned over $10 last quarter. They are estimated to earn $45 this year. The stock is cheaper now than it was then, but will growth still be strong? Android is #1 right now. Google has a platform of products and they think big.
As always, it can be hard to predict when a stock is truly "cheap." I agree, the charts mean nothing when determining that. A good way to "know" if a stock is cheap is to compare its P/E with where it's project P/E's growth places it. Even that valuation has certain limitations, but it's a good financial starting point for an investor I think. However, looking at Google's charts does make me hesitate a bit. With all of the quantitative easing that's happened, we could very well breeze over any potential "correction" that so many analysts are predicting around the dates March 1, March 17 and April 15. (I believe those are the correct dates.)That's the only reason I'm staying out of stocks whose charts look close (or are at) all-time highs: potential market correction.Will growth still be strong? In my opinion, yes, I think Google will continue to grow. Unlike other companies (who are downsizing), Google is still hiring new workers. Their dominance in the internet is virtually set in stone, but there is still room to grow elsewhere like the mobile market. One device that I find VERY cool (although very nerdy looking too) are the Google glasses. When those come out, provided they change the design a bit, I think the market will explode with them. The expected year release is 2014 according to this article:http://www.computerworld.com/s/article/9228612/Google_looks_to_make_science_fiction_real_with_GlassesEssentially, my point is to look for growth in areas outside of web services. Google is in a strong financial position to drive its growth there. As long as they stay top dog with their search engine, growth will probably happen.
I am a bull but I don't know if I'd say their dominance in the internet is set in stone. Tech is so dynamic. Buffet won't buy it for that reason (besides IBM). Apple was dead to rights 10 years ago and Google was nothing. Now look at them. Who knows what the market will look like in 5-10 years. Maybe Bing or something new will be better? I honestly don't know what the barriers to entry are in "search" but they are probably less than one might guess.I'm not that worried that the stock price is at a high. I'd argue that their business is also at a high. I'd also argue their cash hoard will protect them in the event of a market downturn more than leveraged companies. I know ad revenue goes down in a recession but don't jobless people spend more time online since they aren't spending 8 hours at work?I agree the futuristic glasses look cool. Long and strong GOOG for the long term.
Too true. You make some very good points. Sometimes speculating is the only way to get a grasp on the technology sector. I read Scientific America and various online sources for new and upcoming technology bits, but those are usually only good enough to inform me of potential future trends; they say nothing about whether the technology will sell well or not.Talking about technology on blogs unrelated to the stock market (or just reading them) can give one a pretty good idea about what's popular and selling well. At least, that's what I do. Often it's obvious when something will sell well or not. Intel is starting their own streaming television service under a new corporate branch called Intel Media. What are your thoughts on that? :)When I say "set in stone," I'm only emphasizing how I perceive their service's dominance as I reflect on how many people I know who will search for Google on Bing or Yahoo if a public computer uses one of the latter two as the generic home page. You're right, though. Things could very easily see a radical shift some year in the future.
Some points on tech. Tech more than any GICS sector is more likely to go obsolete or grow market cap tremendously. For that reason it's all speculation. You could be like Apple a decade ago and go from dead to rights to 600 billion in market cap, or Facebook was nothing 10 years ago and is worth 66 billion, same with Google. Somebody was arguing on CNBC that Silicon Valley was churning out a brand new 100 billion market cap company every 3-5 years.I am not a techie by any means. Some would laugh at me for being bad with technology. I am not up to date with the latest aps, new tech companies or latest gadgets. The good thing is I know where I stand. If something jumps out to me then it should be obvious to the true techies.Cool technology does not equal profits. Better technology does not equal profits. A lot of true techies will tell you that the Microsoft Zune really was better than the iPod -but it didn't win. You don't need the best tech to win. You need to win over masses not the nerds. Steve Jobs got that.Overall Silicon Valley (Large Cap US Tech) is on sale. 12 years ago it was priced to the moon, now nobody wants it. I have a feeling that in 10 years some of those tech companies will have vastly exceeded expectations, while others might be gone. Overall Silicon Valley will easily outperform the broader market. Hind sight will be 20/20 and people will wish they could just go back in time and buy Silicon Valley.
All very good points. The thing that makes a good technology is one that increases the productivity of a corporation (or happiness of a citizen) without costing (at least) too much more than the next best alternative. In fact, when it comes to corporations, they generally require that the overall cost of employing a new technology (i.e. hiring new professionals, purchasing rights, etc.) is always less. Basically, increased production at the smallest opportunity cost is what they go for. Same goes for consumers, but at a different level depending on the technology.You're right too- this long term pick with Google could explode in my face a few years from now. In general technology is what I'm best at, but I guess we'll see.On a side note, I've been trying for awhile now to branch out to other industries. Mining and Railroads "seem" to make sense, but there's always some kind of insight I'm missing that causes things to change quite unexpectedly in my investments. Biotech and Pharmaceuticals are a mess. Not once have I been able to predict exactly when a drug would go into the next stage or be announced. I've picked up some trends short-selling and going long that have reaped rewards with real money, but I never "feel" satisfied with my trades. It always feels like I'm guessing chart trends more than being insightful. Banking also seems lucrative, but I'm not sure if US policy will continue to favor them. Many of the good growth+income stocks are quite high already.What sector or industry do you like the most?
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