As recently as last November, Google was priced at over $700 per share. But the one-time Internet darling seems to have lost some of its allure.
Google took Wall Street by storm in August ‘04 when the stock debuted at an even $100 a share. Over the next few years, the stock seemed to know only one direction: up. It seemed that no matter how high the earnings expectations were each quarter, GOOG always exceeded them.
But things have changed with the economic slowdown that started last summer. Over the last three quarters, GOOG has missed earnings expectations twice, including the second-quarter results that were released on July 17.
As Google continued to climb higher, the stock price became out of reach for most investors, with a round-lot 100-share purchase costing more than $50,000. This resulted in more institutional investors trading in Google… and institutional investors are far less forgiving than individual investors.
My advice to you is to steer clear of Google. The company seemed invincible, but has proven otherwise in recent quarters. And though the shares may look like a bargain after dropping over $260 from the high, the uptrend in the shares is clearly no longer in place.
[Ed. Note: Being a good investor is as much about knowing what NOT to buy as it is about buying right. Investment analyst Rick Pendergraft can show you what to buy, what to avoid, and how to make smart choices. All by learning one embarrassing secret.]
Similar Articles:
- Why I’m Afraid of Bullish PEGs – The PEG ratio compares a stock’s price (as measured by the price-to-earnings ratio or P/E) with its …
- Why Most Expensive Stocks Are Rip-Offs – Many investors swear by the "efficient market theory." All it means is that through the ma…
- The Real Reason Behind Share Buybacks – Companies know investors love getting cash. And there’s no quicker way to put money into inves…
- The Price-to-Earnings Ratio – I often talk about a stock’s P/E or price-to-earnings ratio in my articles for ETR. While P/E may be…
- The Other Measure of a Company’s Worth – Price-to-earnings ratio (P/E) is a popular measurement of a company’s true worth. I’ve always liked …
- Fantasy Value Can Lead You Down the Wrong Path – If you like to buy companies on the cheap – like I do – you probably look at their P/Es. That’s fine…
- Preferred Shares Aren’t Just for the Pros – One of the more unpopular asset classes right now is a stock/bond hybrid called preferred shares. Wh…