To me, the "Talk it Type it" Google (NASDAQ:GOOG) application has no limits to what it can be used for in the future -- imagine writing papers without having to type them up. Simply conjure up an idea in your thick noggin and speak it to the Tejji App. Presto, you have transformed yourself from a babbling drunk to an undiscovered novelist!
Google Docs are already a very compelling way to write papers, blog posts, etc... without having to install any software on your computer. Cloud computing services allow you to basically use an online version of word on many web sites, and with the addition of a speak to type system when combined with cloud computing you may see authors coming into the fray who can write 10 to 20 pages per day of good material. These advancements in the writing profession as well as the advancements happening on the book distribution side mean that cloud created, voice-to-document articles and novels can be written extremely efficiently over a much shorter period of time.
Surely, Apple (NASDAQ:AAPL) is coming out with the same thing -- very soon you will see authors writing their novels on the beach by simply speaking into their cell phones like they used to do with tape recorders. (Think Hunter S. Thompson sitting at a bar writing a novel by simply talking into his cell). This could revolutionize the entire journalism, blogging, and publishing industries because authors will be able to increase productivity. Typing on a computer is repetitive, leads to repetitive motion issues, and is way less fun than talking into your cell phone at a local park or on your fishing boat.
The question is when, not if, Google will choose to dominate the space that Dragon now owns. Dragon is the best-selling software that lets you talk into your computer to type what you are saying. Already, the Google Chrome App from Tejji allows you to talk to search as do most of the newer Android phones. Surely, the day is near that writers everywhere will stretch out their tired fingers and say "at last, I can stop typing with my hands!" I know for me the time is right for a real competitor in the cloud to take over this time saving corner of the literary world, and it would be cool to have this on a mobile device -- you could do a Captain's Log Stardate post on your blog every morning while your still lying in bed. A good friend used to say that you haven't made it unless you earn money in your sleep -- with Talk it Type it you may have to be half awake to write an article or book chapter but surely you can crank something out when you are half asleep...
As for GOOG the stock, I would look to buy on any significant pullback (7-15%) because I think the market is due for a medium-term correction. Google is trading for just 13X 2013 earnings and for a more robust 22X trailing earnings. GOOG actually has a reasonable price-to-book ratio for a dot com stock at 3.6X and an attractive EV/EBITDA ratio of 12.27X. While I like Google here, I would like it much more at lower multiples. That means selling put options makes sense because you are essentially paid to wait for your limit price to fill your order. Selling put options means that you profit from time decay as well as the long-term uptrend in a stock. In GOOG's case, I think selling a 2013 $600 put option for $40 makes a ton of sense. This is essentially a limit order to buy GOOG at $560. If it trades anywhere above $560 in January of 2013, you make money. If GOOG trades above $600 on January 31, 2013, you will pocket the entire $40 premium, which is a solid 7% return on your risk (the $560 price you are paying for GOOG shares if the stock is "put" to you on expiration).
In conclusion, Google shares are reasonable here and we think Google Docs have a lot of growth potential when combined with "Talk it Type it" applications. Google is one of the best growth names in U.S. stock market history and I expect the long-term trend to continue for this "Web 1.0" company. In the end, GOOG's growth story makes it a G.A.R.P. (Growth at reasonable prices) when compared with many of the Web 2.0 stocks we have analyzed in past articles, which makes this a good long candidate for an internet stock pairs trading basket.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.