Cramer Goes Ga-Ga Over Google

One of the biggest bulls of Google's stock (goog) Jim Cramer just did one of his famous rants on the recent run up in the stock price tonight on his show Madd Money. Now I have to admit that Jim gets it wrong some if not a lot of the time and I take his advice with a grain of salt, but he does make some very good points about Google's stock valuation.

First off, people can't seem to get their heads around a $600 dollar stock. The first thing you need to realize is that there are a lot of other stocks out there that have high price tags. For instance The Washington Post (wpo) at $800, or even Berkshire Hathaway (brk) which is valued at over $120,000 a share!

The only real reason that most stocks don't have such high prices is that they have all gone through stock splits. A stock split is when you take a stock that is $100 for example and you split it in 2. This leaves you with 2 stocks at $50 dollars. Google's management has said from the very beginning that they do not plan on split the stock anytime in the future so the price tag will just continue to go up if the earnings keep pace.

While I do realize that Google's stock price has been on a decent run, it is all up to next weeks earnings to see just how long this can last. If they beat the numbers the stock will continue it's mad pace to 700, if they miss or meat there will be a pull back which would be a good opportunity to place your bets. The only problem is if they beat you could miss out on the fun.

It is up to you though if you believe in the long term story of Google I would put in a little before earnings and a little after this way you can't get burned too bad by a surprise either way. I have been convinced of this story since the IPO and the Google long term story just seems to gets better every day...