Breakout

The Trade: Buy Google

Jeff Macke
Breakout

It may be the 3rd largest company in the U.S. based on market capitalization, but Google (GOOG) retains the capacity to shock analysts for better or worse. In the last four quarters Google has reported one massive beat and a huge miss that was inadvertently leaked during market hours and cratered the stock by more than 10%.

Suffice it to say Exxon (XOM) isn't quite so erratic.

Analysts are expecting $10.79 EPS on $14.45 billion from the search engine / mobile operating system / terrible eyeglass manufacturing company this afternoon, but with the number of things happening at Google no one really has any idea.

Lee Munson of Portfolio LLC thinks investors and traders alike are better off doing nothing. "In the last ten earnings reports, five times the stock has traded up and five times it's traded down," he observes. Trading Google into earnings in Munson's opinion is like going to a roulette table and betting on red or black; it's a waste of time.

Other than overlooking the fact that a roulette table also has a one green slot, Munson might have a point in terms of tonight's one off event. The difference between going to a casino and buying or selling Google is that staying in a casino for any length of time will clean you out, but staying long Google will make you bank.

There are some stocks investors simply need to have in their portfolios unless or until the company makes a radical misstep. Google has its mojo working like no company we've seen since Apple (AAPL) in its prime. Google isn't a top-line story anymore. It's not even a "cost-per-click" story. Google is a company with a nearly unlimited inflow of cash and a whole bunch of ideas on what to do with it.

Google is a buy today and a buy tomorrow. There's a little too much giddy going into the report to expect a price spike but there are way too many good things in the pipeline for Google to stay down for long, even in a worst case scenario this evening.

The next $100 point move in Google is to the upside. The stock is a buy.

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