Why I Would Buy/Hold On to Google Stock

 

Selectively choosing and owning stocks is a great way for businesses and individuals to invest in companies with sound management principles and practices.

 

However, stocks are just one of the many investment instruments, that a business/individual can have in its/his/her financial portfolio.

 

In an effort to assist you in making wise business and financial decisions, MOUBlog has brought you stock advice in the past.

 

Today, we continue this educational process...let's begin! :

 

Google, the US-based multinational that invests heavily in the Internet and produces Internet-based products and services, has consistently reported increased billion-dollar profits, for every year since it has gone public (in 2004).

 

E.g. in 2008, its net profit was $4.22 billion; in 2009, $6.5 billion and in 2010, $8.5 billion.

 

Investors have so much faith in this stock, that its current stock price is $526.84.

 

In fact, it has consistenly performed on average, 300% better than the S&P 500, NASDAQ and DJI indices, since it's Initial Public Offering in 2004.

 

Google (stock symbol: GOOG) represents a great long term value stock, with most analysts suggesting a hold or buy of the stock...

 

...Why?

 

1) The foresight of its senior management team (C-level execs) in being able to:

 

a) Innovate and bring to market, products that respond to /anticipate customer needs e.g. Android OS  and Google Maps - and the millions of derivative apps that have sprung up from both these products

 

b) Make wise investment decisions. E.g. its recent investment of $168 million in the Mojave solar power plant, that will be used to power its huge data centres that house the servers that run its Internet search engine, e-mail and other online services

 

c) Take the competition in various profitable markets, on, head-on e.g. it's current competition with Apple in the mobile and mobile app markets

 

d) Hire the best technology professionals in the industry.

 

Although it's had some misses e.g. its recent Google TV product offering that's getting a beating by Samsung, it will be buffered by the success of its other product offerings:

 

Google Adwords and Android OS will continue to be major revenue-earners for this company.

 

[Adwords allows advertisers to place ads on websites frequented by their target market, whilst Android OS allows users to use applications on Google Android phones. Google gets at least 30% of ad revenue generated, with site owners getting the rest.

 

Adwords continues to drive revenues for this company - so much so that advertising revenues contributed to 96% of Google's revenues in 2010 (page 29 of Google's 10-K report)].

 

To me, all the above represent a safe buy and hold of Google for now, unless something drastically happens where its management team is concerned.

 

(Which is highly unlikely, as Google knows how to hire and keep great managers).

 

So, if you can afford to buy GOOG stock, do so now...if you have it, hold on to it. I see it steadily increasing in value for at least five (5) years from now.

 

(NB: The information contained in this post, does not substitute for advice from your financial adviser. Please consult with this person for financial advice).

 

Gillian

 

Sources Include

 

1) Article, "10 Steps to Building a Complete Financial Portfolio", by Joshua Kennon, About.com Guide, About.com, 

 

2) Google's Income Statement for Period Ending December 31,2010, via Yahoo Finance, accessed April 18,2011

 

3) Google's stock price for April 18,2011, via Yahoo Finance, accessed April 18,2011

 

4) Google's stock price in comparison to S&P 500, NASDAQ and Dow Jones Industrial Average, via Yahoo Finance, accessed April 18,2011

 

5) Analyst Opnion of Google stock, via Yahoo Finance, accessed April 18,2011

 

6) Google's Management Team via Google.com, accessed April 18,2011

 

7) Google's 10-K Report, for Fiscal Year Ended December 31,2010, accessed April 18,2011

 

8) Article, "Google Solar Project: Google Invests $168 Million in Mojave Power Plant", via HuffingtonPost Los Angeles, April 11,2011

 

9) Article, "Google Reorganizes Senior Management Team", by Clinton Boulton, eWeek Europe, April 11,2011

 

10) Article, "Samsung's Now Served Up 1 Million Apps Via its Web-Connected HDTVs, Google TV What?, by Matt Burns, TechCrunch.com, December 2,2010