Google Search 'Good Long Term Investment': Top Result Is Google

| About: Alphabet, Inc. (GOOG)
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I have been long Google for quite some time, and I still believe it to be a worthwhile investment. Why?

Simply put, I originally bought Google (NASDAQ:GOOG) as my life was becoming Googlefied. Having purchased an Android phone, I found it vastly superior to the Palm phone that it replaced. To download email in real time on it, I set-up a gmail account which I found to be, infinitely superior to Yahoo (YHOO) mail. I likely would not have set-up gmail had I not purchased the smartphone. To search the internet on my phone, I merely speak into it, the sound waves get decoded, and I get the ultra-reliable results via Google’s search engine. My schedule is done by Google. Heck, this blog I am writing is even powered by google blogger, and is saved in Google docs.

To boot, which is exactly what Google wanted, I have since eliminated any Bing / Yahoo searches, having developed a "Google habit".

Google also has a huge moat around its castle. This is a term coined by Warren Buffett, meaning that a business would be hard to overtake/ attack/ because they have a of its competitive advantage.Some examples of moats include: Coca-Cola (NYSE:KO) and its top notch brand name consumers strongly associate with premium soft-drinks; government protected monopolies which prohibit any competition, which still exists in some countries; or the vast amount of capital it would take to start producing offshore oil drilling equiment, limiting competition in the field.

Google's moat is the name brand recognition of its search engine, the general goodwill it has, and its cutting edge technology that Microsoft (NASDAQ:MSFT)-- and its second best search engine Bing-- fall well short of. Google continues to refine its algorithims to stay ahead of the game.

Simply put, pending a valuation inspection, I like to own stock in companies whose products I enjoy using. Google has a tremendous amount of goodwill with me.

Why Buy Google Now?

1. It is relatively cheap. Google's earnings growth have been outstanding, especially for a company its size, making its PE ratio of 19 relatively cheap.

2. Its search engine keeps getting better, with less and less spam, and far more indexed pages than its competition.

3. Depressed earnings. Google could show Wall Street much higher earnings, however, it continuously invests so much into Reasearch and Development. Current CEO, and Google founder, Larry Page has actually been increasing R&D in the last couple of quarters. Many CEOs look for short term fixes, and become momentary heroes on Wall Street by increasing earnings over the short run, at the expense of slashing the innovative parts of companies that fuel their long term growth. This eventually causes the company to atrophy, dying a slow death.

Google will continue to innovate and lead.

4. Of course, when a company gets to be this size, many ambitious employees leave for start-ups, often of their own, but Google gave out extra bonuses last year to keep their talent. Obviously Google has a highly skilled staff, which it keeps by encouraging its engineers to take one day a week to work on anything they really want to see created. This is where Google Translate and Gmail have come from.

5. Even if we have inflation-- which is likely based on the infusion of money the Fed has injected into our economy as an artificial way to prop up financial markets, rather than allowing real growth and innovation to lead the way-- the real price of Google ad sales will not change too much based on inflation. Ad link sales are very elastic and scaleable.

6. Google already has driver-less cars going between San Fransisco and Los Angeles. A few months ago, the Nevada legislature passed a bill to begin allowing testing of such driver-less cars. That is future innovation that I would be very open to trying from a software brand name that I so highly associate with innovative quality. "Car, gym, now!"

7. Google wallet. Giving smart-phones the ability to process credit card payments reduces even further the friction in financial transactions. Who likes to look through their wallet every time they pay to pull out the right credit card? Also, this will give Google additional data on consumer habits, and why they are ramping up Google Offers, as well as joining forces with more and more local deal brokers.

8. Android Operating system for Smart Phones. It dominates in market share. Granted, Apple actually makes the bulk of the money in the smart phone field, while Google essentially gives away the Android operating system for free. However, Google's efforts have led consumers like me to use the Google search even more frequently, and gives Google the ability to deliver coupon deals based on your location via Google wallet as described above.

9. CASH- Additionally, Google has a tremendous amount of cash to continue to make more acquisitions, and a bullet proof balance sheet. If Google were to distribute every $ they have in the bank to shareholders, you would be buying this innovative company for something like 15 x current earnings. Ummm ... that's not expensive for an old stalwart company experiencing little growth.

The Case Against Buying Google

1. Facebook and Microsoft might attempt to use the massive amount of data Facebook’s users give them on a minute by minute basis to create a personalized search engine.

2. Steve Jobs' last will and testament requests help from the world to destroy Android.

3. Patent troll Microsoft answers Jobs prayers, takes a bite out of Android, raising its smart-phone prices, inducing makers to switch over to Windows 7 phones.

4. Anti-trust regulators deem Google abuses its search monopoly.

5. Google Plus will not be as successful as Google hoped. Sadly this is rather likely.

The bottom line

All companies face headwinds and potential pitfalls that must be overcome. There’s risk to any investment, but I believe Google’s stock to be a buy right now. I know this much-- my life has been Googlefied, I love using Google products, and-- at minimum-- will experiment with anything the company potentially will offer in the future. On a valuation basis, the price seems right.

Disclosure: I am long GOOG.