Google is a great company. It consistently reinvents itself to keep up with the times, regardless of having a large market share and a large breadth of product offerings overall. It's always "out with the old and in with the new."
In other words, Google knows when to cut its losses, which is as crucial in the technology business as it is in playing poker.
Right now, Google is trading at roughly $808 and carries a one-year target estimate of $869.10, so buying in right now means a one-year return of around 7.5%, assuming the analyst consensus is correct. Forecasted growth for the company is strong at 13.6% per annum for the next five years, but that is somewhat under its industry's average of 19%.
However, that does not mean that meeting $1,000 a share is going to happen for the company in the next year. I think it will happened eventually -- Google is incredibly consistent -- but it is going to take some time. I like Google at $750 -- that would be a return just under 16% if the one-year target is accurate -- but I'm not holding my breath. I think Google is a "buy" but I would only recommend it for those investors looking to hold the stock for at least a couple years.
Moreover, I can't help but question the company's recent directions.
Most notably, Google Reader is slated for retirement on July 1, 2013. The popular app, which has been around since 2005, simply doesn't have the volume of users it once did. Google is instead recommending Google Takeout for those looking for RSS alternatives, but it seems like the public is protesting. VentureBeat reported Sunday that RSS application Feedly has already added more than 500,000 users since Google announced it was shutting down Google Reader. Feedly, which is a private company, "knows this is a big moment, so it doing all it can to keep the users it gains from Reader's demise. To keep up with all the new users, the company said it has increased its bandwidth by 10 times and added new virtual servers. The company's top three priories for the next month are to keep the service up, to listen to new user suggestions, and to add new features each week."
Google is also ending support for its Google Voice for BlackBerry App, Snapseed Desktop and Google Cloud Connect, amongst others. Instead, Google is updating some its offerings, such as Gmail, and pushing other ones, like requiring Google Cloud users to install Google Drive. The strategy seems a bit odd to me. The company provided suggestions for users of those apps when it made the announcement, but why make users jump through hoops? Wouldn't it be better to make it easy for users to use your products to ensure that as many people as possible use them?
Then, there are the new initiatives Google is pursuing. The company currently appears to be going to pains in building some buzz around Google Glasses and challenging Evernote with a new app called Google Keep. The latter was live briefly according to VentureBeat, and users said it worked a lot like the now-defunct Google Notebook.
Ok.. so wearable hardware that costs $1,500 a pair (or at least did in the pre-release issue) and an app that works like Evernote. I'm not going to bet the farm on those sorts of products. The market is simply too narrow for a company as large as Google.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.