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Alphabet Inc. Message Board

  • tacked_up tacked_up Aug 1, 2006 8:58 PM Flag

    Ruminations

    As most of you that read my posts with any degree of thoroughness know, I do not make day-to-day predictions on the movement of Google's share price. That said, however, I am becoming more and more convinced that after two consecutive quarters of solid growth of both its top and bottom lines, Google right now is being severely undervalued by the market.

    The forward PE, using 2006's whole year estimate of $9.92, which I believe is very conservative, is currently 37.9x. If you take what Google should earn for the next four quarters from today, the estimate comes in at about $11.53 (ie, 3Q 2006 through 2Q 2007), and that gives a forward PE for the next 12 months of 32.6x. For the full year 2007, the current estimate is $13.14, and that gives a forward PE of 28.6x.

    Compare these to forward PEs that should be in the 40-60x range for a company that is still growing as fast as Google is.

    Many of you will accuse me of being a perma-bull. I am not. I am seeing a company that is clearly the leader in its field being punished by the market. Google is fundamentally strong. You can make up whatever arguments you want to that attmept to accuse Google of accounting fraud, etc., but the fact remains that financially, Google is turning in VERY solid operating results and is fundamentally in excellent shape.

    But the fact also remains that Google is in a quagmire of late. The markets are in a funk, and tech in general is not in favor today. In fact, a quick look at this chart tells us that Google has actually held up very well as compared to the major indices and to some prominent tech names:

    http://finance.yahoo.com/q/bc?t=3m&s=GOOG&l=on&z=m&q=l&c=yhoo%2Camzn%2Cebay&c=%5
    EGSPC&c=%5EIXIC&c=%5EDJI



    While it would not shock me to see Google's share price go lower, I am very surprised that it doesn't have at least a 45x PE right now.

    The bottom line as I see it this: Google is in the doldrums due to a lack of buying interest, and not due to any particular surge in selling. If that were the case, we would have seen much higher share volume in the last few days, when in fact, we have seen some of the lowest volume days in Google's history. For the year 2006 to date, for example, 13 of the lowest volume days of the year occurred in July. And July only had 19.5 days of trading. So that ought to tell us something.

    I will be convinced that Google is either truly being sold off or is on its way to higher highs ONLY when I see convincing volume on a sustained basis. My guess is the volume should return within two weeks, and we will have our answer one way or the other, and with unmistakable clarity.

    Until then, it's is not within my skill set to predict the daily price action of Google's shares.

    But one thing that is very noticeable to me now is that those who stand to profit from a lower price per share, and those who would love to see calamity befall certain members of this board who are known to be bullish on Google, are becoming more and more vociferous in their posts. And that is one of those very important, if intangible, signs that tells me we are nearing a turning point.

    Good luck to all.

    tu

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    • I've already answered you. If this continues, I'll have to put you in a special class. It's located in the iggy bin.

    • Your citation yesterday was nothing more than a bitter, ranting opinion piece. It did not cite one single piece of evidence or proof. I challenge you right now to point to something in that piece that points demontrably to evidence of accouting fraud. If there is fraud at Google, why is it not all over the Wall Street Journal's front page right now?

      It's fine if someone writes an article that expresses an opinion that you agree with, but opinions are NOT facts.

      I can certainly appreciate that you hope there is fraud at Google. But facts don't back up your hope.

      tu

    • If you have to be shown where the accounting fraud is proven to have been as actively still is, you'll have to wait for the lawyers to be interviewed and have CNBC put it into clear anchor-head language. I gave you a couple of articles yesterday comparing Enron mgmt shenanigans with goog's. You can either stay with the class or look stupid. 7mile also gave you pertinent info but you choose to see it as immaterial. Fine. We'll soon see who has learned the lessons of the past; that's where you'll find the truth before it is put through court and newspapers. Look at the stock action and decide for yourself if everything you read is true about goog. As I said yesterday, something's afoot.

    • PS:

      your quote: "but it has only lied about clicks and numbers as I see it"

      That clearly shows your bias. Many, many other do not see it that way.

      tu

    • I saw a great many opinions masquerading as facts, but you for instance, have failed to respond to my two prior requests to point to evidence that Google is another Enron. By making that comparison, you are implying that Google is or has engaged in accounting fraud, and I have asked you to point to specific evidence in Google's financial statements, or in a respected business new source, that demostrates that allegation. You have failed to do so. Now is your chance. Show me where the accounting fraud is.

      tu

    • You are banned for making too much sense! Only smoke, dust, spin, and bubbleheads allowed! LOL!

    • Maybe goog has "proven" that to you but it has only lied about clicks and numbers as I see it. You'll be forced to see it after the legal forces set in. It'll be too late then.

      I respond to your posts not to argue but to offset their effects on newbies. Of course, you'll continue to be long and that's fine by me. Many facts were presented yesterday on a silver platter as per your request by different posters. Yet, you still pump as if you've not be exposed to the sham. That's okay by me too as long as nobody gets hurt from it. So, expect people to openly disagree with you on this forum since that's what it is for.

    • Of the 28 lowest volume trading days in 2006, 13 of them were in July (which only had 19.5 trading days to begin with).

      I believe my original post in this thread is being validated with yesterday and today's early price action. We are seeing the increased volume I referred to, though it needs to be sustained for Google shares to really have lasting traction, but we are making good strides with 1 million shares in the first 30 minutes today.

      And yesterday's posting action in here was, to say the least, spirited.

      Good luck to all,

      tu

    • Save it.

    • You know nothing about my trading acumen. Much of my trading history is on my own board, in print.

      And like you, I have no current position in GOOG.

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