"Google (NASDAQ: GOOG) remains the dominant search engine on the web," notes Paul Tracy. In his StreetAuthority Market Advisor, he views the stock as a solid buy for growth investors.
"In economic downturns, one of the first costs most companies cut is advertising. Not surprisingly, over the past year, most companies have slashed their advertising budgets in response to the severe economic downturn.
"But online ad spending has remained remarkably resilient. GOOG's system targets specific ads based on what users type into their search box, geographic location and other factors.
"Google's main competitive advantage lies in its dominance of the search market, as well as the scale and reach of its advertising network. The firm has a near two-thirds share of the online search market.
"The firm is consistently improving upon its sophisticated, proprietary systems so that it can more effectively deliver ads to users who are most likely to click through to advertisers' websites.
"GOOG trades at 16 times projected earnings and has a long-term growth rate of close to +19%. It's unusual to find a market leader like GOOG trading at a discount to its long-term growth rate.
"My staff and I believe that GOOG could trade at as much as 1.5 times its long term growth rate, which would equate to a P/E of about 29 times. On that basis, the stock could trade as high as $600.
"In addition, Google has no debt and nearly $18 billion in cash. This strong financial position gives the company the ability to make strategic acquisitions in an environment where valuation levels for many Internet companies remain depressed.
"Google 's dominant position in the fast-growing Internet search business make the stock a solid 'Buy' for growth-oriented investors."
Steven Halpern's TheStockAdvisors.com offers a free daily overview of the favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
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