After more than a year of waiting, Google (GOOG) appears ready to break out past $630 resistance.
As I first mentioned in April, $630 (blue line) has proved to be a thorn in Google’s side since December 2009. That’s right, for nearly three years Google shares were subdued by $630 resistance.
Though the bears persistently dragged Google lower each time the stock neared $630, buyers rarely let the stock slip below $500. And in recent months, the bulls built support for Google near $565 (blue arrows).
See a chart of Google here.
I own Google shares in my retirement account because the company dominates the online advertising industry, generating incredible amounts of money from paid search. It has also shown a willingness to expand into other industries, such as hardware, video, and even space travel.
This is a great company, and the rally that’s been in the making for years may have started. Google has already passed the first challenge by moving above $630. If the rally has truly begun, the shares should bounce to $700 as early as this month. In addition to the rally up to $700, buyers should provide support near $630 (the once-formidable resistance level).
A move higher makes sense on a valuation basis, too. Analysts following Google stock expect it to earn $49.36 per share in 2013. If the EPS estimate is accurate, the shares will carry a 14 P/E ratio upon reaching $700. A 14 P/E ratio is cheap for a company that consistently increases earnings by more than 16%.
Forget about Apple (AAPL) reaching $1,000. Google stock looks ready to hit the $1,000 mark first.
Editor's Note: This article was written by Jason Cimpl of The Daily Profit.