Seeking Alpha
, Barchart (26 clicks)
Momentum, long only, newsletter provider
Profile| Send Message|
( followers)  

One of the most widely followed stocks that has not been performing well recently is Google (GOOG). I think that the bad treatment is a little unwarranted and I'll outline why. First, look at this hourly trading chart provided by Barchart to see how the stock has reacted since releasing a favorable earnings report:

Indeed, even over the last 6 months the stock hasn't even kept up with the market. While the Value Line Index was down 5% GOOG was down 6%:

Google Inc., a technology company, maintains an index of Web sites and other online content for users, advertisers, and Google network members and other content providers. It offers AdWords, an auction-based advertising program; AdSense program, which enables Web sites that are part of the Google Network to deliver ads from its AdWords advertisers; Google Display, a display advertising network that comprises the videos, text, images, and other interactive ads; DoubleClick Ad Exchange, a real-time auction marketplace for the trading of display ad space; and YouTube that provides video, interactive, and other ad formats for advertisers.

The company also provides Google Mobile that optimizes Google’s applications for mobile devices in browser and downloadable form, as well as enables advertisers to run search ad campaigns on mobile devices; and Google Local that provides local information on the Web. In addition, it offers Android, an open source mobile software platform; Google Chrome OS, an open source operating system; Google Chrome, a Web browser; Google+ to share different things online with different people; Google TV, a platform for the consumers to use the television and the Internet on a single screen; and Google Books platform to discover, search, and consume content from printed books online.

Further, the company provides Google Apps, a cloud computing suite of message and collaboration tools, which primarily includes Gmail, Google Docs, Google Calendar, Google translate, and Google Sites; Search Appliance, a search technology for use within enterprises; Google Site Search, a custom search engine; Google Commerce Search for online retail enterprises; Google Maps Application Programming Interface for businesses; and Google Earth Enterprise, a firewall software solution for imagery and data visualization. Google Inc. was founded in 1998 and is headquartered in Mountain View, California. ( Yahoo Finance profile)

Barchart technical indicators:

  • Bad technicals can signal an entry point if the fundamentals look good
  • 56% Barchart technical sell signal
  • Trend Spotter hold signal
  • Selling below its 20, 50 and 100 day moving averages
  • 14.99% off its 1 year high
  • Relative Strength Index 44.11%
  • Barchart computes a technical support level at 570.60
  • Recently traded at 568.83 which is below its 50 day moving average of 587.77

Fundamental factors:

  • Here's where it gets scary when comparing technicals to fundamentals:
  • Followed by 31 Wall Street brokerage firms
  • Analysts project revenue to grow by 22.10% this year and another 19.70% next year
  • Earnings are estimated to grow by 19.80% this year, an additional 16.40% next year and continue at an annual increase of 17.68% for the next 5 years
  • Analysts have 26 strong buy, 3 buy, 2 hold and no sell or under perform recommendations in place
  • They think the total annual rate of return for investors entering at this point to be in the 18.50% - 22.50% over the next 5 years
  • The P/E of 17.78 is not much of a premium to the P/E of 14.80 for the overall market
  • Balance sheet is rated A++

Investor interest:

  • I measure individual investor interest by looking to the readers of Motley Fool where 17,741 readers have an opinion on this issue
  • 86% voted for the stock to beat the market
  • 89% of the more savvy and experienced All Stars votes for the same result
  • Some firms giving a favorable opinion are Goldman Sachs, UBS, Barclays Capital Management and Deutsche Securities
  • Positive articles have been issued by Jim Cramer, Charles Payne, Tobin Smith, Ron Baron and Gary B Smith

Competition:

I always like to compare a stock performance over the last year with that of its peers. Google was up 7%, Amazon (AMZN) up 3%, Ebay (EBAY) up 21% but Baidu (BIDU) is down 22%:

Summary: Google looks like a 10-10-10 stock to the analysts. That means they expect revenue, earnings and total return to increase by more than 10% a year. The stock is not selling at much of a premium to the market and has an A++ balance sheet. All the fundamental projections by analysts are positive but the stock's technical movement has been weak. If you decide to buy please follow the moving averages and turtle channels to see if the market continues to act negatively:

Source: What's With Google?