Google To $1,000

| About: Alphabet Inc. (GOOG)

Google (NASDAQ:GOOG) is finally receiving the attention that it deserves. Though I've been a huge fan of Google for years, I've been more emphatic with my positive view in recent months.

In a June ChartWatch article, I recommended readers buy the stock near $565 and attached a $630 target price to it. By August, the stock had exceeded the $630 target. So I upped my new target for GOOG to $700.

The shares proceeded to rise beyond $700 by October, hitting new all-time highs. Despite that huge rally from $556 to $770, GOOG wasn't receiving much attention. The Street was too concerned with Apple (NASDAQ:AAPL) and its own meteoric rise from $358 to $679. Contrary to the experts' analysis, I made it clear GOOG would reach $1,000 before AAPL.

Google is one of my favorite companies, and it comprises a significant portion of my personal investment account. So it was frustrating to see Apple receive attention while Google sat by the wayside.

Not only do I own GOOG in my account, readers of my Top Stock Insights service have purchased it several times in the past - each time for at least 32.5% in profit. The most recent entry (see chart below) occurred after the stock dropped 8.5% following an earnings announcement. I quickly informed my readers to expect a decline to at least $650 before a turnaround (blue box), and an opportunity to jump back into the shares. GOOG declined to as low as $636. But it turned, and quickly exceeded $800 for the first time.

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Though a pullback may be near again, GOOG has much further to climb.

The shares are undervalued. Though the trailing P/E is 20, GOOG's forward P/E is only 15 times next year's expected EPS of $53.44. The S&P 500 has a P/E above 18, GOOG's industry has an average P/E of 26 and GOOG normally has a P/E near 21. All this suggests that GOOG is undervalued based on its future EPS.

The analysts are way behind, again. Though 25 of the 38 analysts rate GOOG as a buy (none with a sell), the average price target is only $830. In fact, the highest target (as of February 20) is $950. So the most optimistic price target values GOOG at only 17-times 2014 EPS. That's absurdly low, especially considering the company boasts more than $145 per share in cash equivalents. Meanwhile Apple has fallen off a cliff and 72% of analysts (34 of 47) rate it as a strong buy.

Stepping back from valuation metrics, GOOG remains a strong investment. The company dominates web search and online advertising. They're also a major player in mobile advertising, which eMarketer expects will be an $11.1 billion industry next year. GOOG represents about 55% of that industry and 94% of the mobile search market. So I expect GOOG will dominate mobile in the same way it dominated PCs during the past 15 years … both here and abroad.