Google (GOOG) has had a large move over the last few days, rising over $120 since the October 4, 2011 lows. Profit-taking has come in after testing the $600 area. I'm bullish on Google and view this profit-taking as an opportunity to build a position.
Here are some points I like about Google's story:
- Android is growing at an extremely fast pace. Over 190 million devices now run on Android worldwide. I expect Android to gain more market share as competitors like Research In Motion (RIMM) struggle to compete.
- Mobile revenue has grown to over $2.5 billion in the last twelve months. Google has seen high-usage products like tablets and cellphones generate large revenue for the company. The continued growth of mobile devices will be a strong source of revenue for the company going forward.
- Third-quarter gross revenue increased 33% year-over-year to $9.7 billion and 8% quarter-over-quarter. I look for this trend to continue in the fourth quarter.
- Global aggregate paid click growth was up 28% year-over-year and up 13% quarter-over-quarter.
- Enterprise side of the business is starting to gain steam as more companies take advantage of Google products. Enterprise Apps have seen strong growth, with companies and government agencies taking advantage of products like Google Docs.
I view this pullback as a buying opportunity. I like Google even though operating profit margins have declined from 46% to 41% in the third quarter. The company is still in a strong growth phase, and I expect that trend to continue. I expect the mobile side of the business to be huge once the Motorola Mobility (MMI) purchase is complete. I expect Google to integrate its software and hardware to provide users with a more seamless experience. This will allow Google to better compete with Apple (AAPL).