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Matt Schilling
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Born: September 5th 1982 Location: Queens/Long Island, New York Marital Status: Engaged Children: Zoey Marie Academic: Towson University, B.S. 2006 Major: Political Science Minor(s): English, Economics, & Mathematics I've had a love for the securities markets since I was about 8 years... More
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  • Will Google's Upgrade Make The Stock A Better Long Term Growth Play?

    Based on a recent upgrade An analyst recommendation can either pop or drop a stock based on their ratings and price target assessments. On August 13th Morgan Stanley upgraded shares of Google, Inc. (NASDAQ:GOOG) to an overweight rating and I think that along with the several other secondary variables this recommendation could result in Google becoming a better growth play over the long term.

    Google Inc. closed trading at $668.66/share on Tuesday as the company had its stock upgraded by Morgan Stanley to an Overweight from a previous rating of Equal Weight on Monday. In my opinion there's a lot of good going on at Google especially in terms of their most recent acquisition of Frommer's. According to a source, citing the acquisition, "Google wants to become a major resource in online travel content and services, and its purchases of ITA Software and Zagat, along with the present purchase, underscores that goal". This could mean any number of things, and when they enter the online travel industry as a competitor, they'll be faced with fierce competition from both Kayak (NASDAQ:KYAK) and Orbitz Worldwide (NYSE:OWW), both of whom are down -11.54% and -20.88% for the year, respectively. If we look at GOOG from a numbers perspective, the company's EPS trends have been solid with the exception of the December quarter when the company missed by $1.00/share, and the company's margins over the last 12 months have been very respectable as profit margins came in at 25.74% and operating margins were 30.76%. When it comes to GOOG the one thing potential investors should consider is how well the company is able to monetize on mobility, whether it be user initiated searches or a click-through on target specific mobile ad, and if those conversions can outperform other tech companies such as Facebook (NASDAQ:FB) in the social media space. If the company can succeed in both the online travel and mobility segments we could easily see GOOG begin trading at $710/share - $730/share.

    Final Analysis

    I think Google should deliver results throughout the second half of the year as the company continues to grow by acquisition. Potential investors should initiate a small to moderate sized position at current levels and look to add to that position on either the news of an earnings beat or yet another acquisition.

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Tags: GOOG, Technology, M A
    Aug 16 10:57 AM | Link | Comment!
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