Google: Internet Darling No More

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.]

Inspired by his high school economics teacher, Rick Pendergraft fell in love with the markets at an early age. He entered his first investing competition at 17, and opened his first brokerage account before he finished college. At the age of 23, on the third options trade he had ever placed, Rick turned $1,800 into $22,000 in less than a week, when the company he bought became the target of a takeover. He admits it was a stroke of luck, but it was a memorable education as to the leverage that options can provide. After a ten year career in banking, Rick decided to pursue trading full-time. To get his foot in the door, he started out in the sales department at Schaeffer's Investment Research. It was not long before his talent was recognized and he was invited to apprentice under Bernie Schaeffer, one of the top options traders in the world. Rick thrived in his new position and twice received the award for "Top Trader."Rick has developed a loyal following of readers who are grateful for his timely warnings and profitable advice. He is widely recognized as a market expert and has been frequently quoted by Reuters, BusinessWeek, Forbes, USA Today, the New York Times, and the Washington Post. Rick's primary focus is on identifying short and intermediate term rising and falling trends in the major market sectors. His analysis is based on technical factors along with indicators of market sentimentRick lives near Delray Beach, FL with his wife and three children.