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GOOG offers a great buy

|Includes: Alphabet Inc. (GOOG)

Google announced quarterly earnings for Q1-2010 that beat  expectations. But surprisingly, the shares slid dramatically in the after hours. I think that offers a great buying opportunity. Here is why. The chart below tracks share prices and quarterly earnings since 2004-2005. You can see that the share prices are in general kept pace with the earnings growth till 2008. When the financial crisis blew up,  GOOG tumbled, even though the dip in the earnings was modest. And now for past two quarters, Google has shown astounding growth in earnings. In fact the growth rate seems high even compared to early stages of the company.  If one draws a trend line from the pre-crisis share prices, you can see that at the current earning level, GOOG deserves  price upwards of 700. So if GOOG dips, that offers a great buying opportunity to make some long term profits. 

Disclosure: Long GOOG