Google Reports Solid 2nd Quarter Earnings Again

Wall Street yawn as Google reported stellar earnings as usual. Here are some highlights from the release...

Q2 Financial Summary

Google reported revenues of $5.52 billion for the quarter ended June 30, 2009, an increase of 3% compared to the second quarter of 2008. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the second quarter of 2009, TAC totaled $1.45 billion, or 27% of advertising revenues.

Google reports operating income, operating margin, net income, and earnings per share (EPS) on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures in the accompanying financial tables.

• GAAP operating income for the second quarter of 2009 was $1.87 billion, or 34% of revenues. This compares to GAAP operating income of $1.58 billion, or 29% of revenues, in the second quarter of 2008. Non-GAAP operating income in the second quarter of 2009 was $2.17 billion, or 39% of revenues. This compares to non-GAAP operating income of $1.85 billion, or 34% of revenues, in the second quarter of 2008.
• GAAP net income for the second quarter of 2009 was $1.48 billion as compared to $1.25 billion in the second quarter of 2008. Non-GAAP net income in the second quarter of 2009 was $1.71 billion, compared to $1.47 billion in the second quarter of 2008.
• GAAP EPS for the second quarter of 2009 was $4.66 on 319 million diluted shares outstanding, compared to $3.92 for the second quarter of 2008 on 318 million diluted shares outstanding. Non-GAAP EPS in the second quarter of 2009 was $5.36, compared to $4.63 in the second quarter of 2008.
• Non-GAAP operating income and non-GAAP operating margin exclude the expenses related to stock-based compensation (SBC). Non-GAAP net income and non-GAAP EPS exclude the expenses related to SBC and the related tax benefits. In the second quarter of 2009, the charge related to SBC was $293 million as compared to $273 million in the second quarter of 2008. The tax benefit related to SBC was $69 million in the second quarter of 2009 and $48 million in the second quarter of 2008. Reconciliations of non-GAAP measures to GAAP operating income, operating margin, net income, and EPS are included at the end of this release.

As of June 30, 2009, cash, cash equivalents, and short-term marketable securities were $19.3 billion.

Google also increases it ever growing stock pile of Cash, as of June 30, 2009, cash, cash equivalents, and short-term marketable securities were $19.3 billion. Impressive, but then again I was sold on Google a long, long, time ago. Let's see how the aftermarket treats it...

Google Keeps On Trucking As The Rest Of The World Burns

The recession proof Google proved that well... it's recession proof! Even with the major downturn in essentially all the economies around the world Google managed to beat analysis estimates and actually grow year over year and quarter over quarter. They manged to make GAAP operating income for the fourth quarter of 2008 of $1.86 billion! That is nothing to sneeze at when a lot of other companies are reporting losses. They also have 15.85 billion in cash, cash equivalents, and short-term marketable securities as of December 31, 2008. Not too bad either... Here are the other highlights from the quarter...

• Revenue growth of 18% Y/Y and 3% Q/Q
– Google properties revenue growth of 22% Y/Y and 4% Q/Q
– Network revenues increased 4% Y/Y and 1% Q/Q
– International revenue was $2.9 billion
• Operational Highlights
– Traffic and revenue solid in Q4 despite difficult economic environment
– Key investments continue in our core search and ads businesses
– Increasing prioritization of our newer investments:

And my personal favorite the visual evidence of Google's growth...I don't have to tell you what to do... the numbers speak for themselves...

Google Reports Stellar Earnings In A Horrible Market

With investors wondering if anything will go right for them this year, Google comes out and knocks it out of the park. A glimpse of light at the end of this dark financial tunnel. Here are a couple highlights from the quarter...

Revenue growth of 31% Y/Y and 3% Q/Q
– Google properties revenue growth of 34% Y/Y and 4% Q/Q
– Network revenues increased 15% Y/Y and 1% Q/Q
– International revenue was $2.8 billion

Here is what the big wigs had to say about the quarter...

"We had a good third quarter with strong traffic and revenue growth across all of our major geographies thanks to the underlying strength of our core search and ads business. The measurability and ROI of search-based advertising remain key assets for Google," said EricSchmidt, CEO of Google. "While we are realistic about the poor state of the global economy, we will continue to manage Google for the long term, driving improvements to search and ads, while also investing in future growth areas such as enterprise, mobile, and display."

A summary of the numbers...

Google reported revenues of $5.54 billion for the quarter ended September 30, 2008, an increase of 31% compared to the third quarter of 2007 and an increase of 3% compared to the second quarter of 2008. Google reports its revenues, consistent with GAAP, on a gross basis without deducting traffic acquisition costs (TAC). In the third quarter of 2008, TAC totaled $1.50 billion, or 28% of advertising revenues.

Google reports operating income, net income, and earnings per share (EPS) on a GAAP and non-GAAP basis. The non-GAAP measures, as well as free cash flow, an alternative non-GAAP measure of liquidity, are described below and are reconciled to the corresponding GAAP measures in the accompanying financial tables.

-- GAAP operating income for the third quarter of 2008 was $1.74 billion, or 31% of revenues. This compares to GAAP operating income of $1.58 billion, or 29% of revenues, in the second quarter of 2008. Non-GAAP operating income in the third quarter of 2008 was $2.02 billion, or 37% of revenues. This compares to non-GAAP operating income of $1.85 billion, or 34% of revenues, in the second quarter of 2008.

-- GAAP net income for the third quarter of 2008 was $1.35 billion as compared to $1.25 billion in the second quarter of 2008. Non-GAAP net income in the third quarter of 2008 was $1.56 billion, compared to $1.47 billion in the second quarter of 2008.

-- GAAP EPS for the third quarter of 2008 was $4.24 on 318 million diluted shares outstanding, compared to $3.92 for the second quarter of 2008 on 318 million diluted shares outstanding. Non-GAAP EPS in the third quarter of 2008 was $4.92, compared to $4.63 in the second quarter of 2008.

-- Non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, and non-GAAP EPS are computed net of stock-based compensation (SBC). In the third quarter of 2008, the charge related to SBC was $280 million as compared to $273 million in the second quarter of 2008. Tax benefits related to SBC have also been excluded from non-GAAP net income and non-GAAP EPS. The tax benefit related to SBC was $63 million in the third quarter of 2008 and $48 million in the second quarter of 2008. Reconciliations of non-GAAP measures to GAAP operating income, operating margin, net income, and EPS are included at the end of this release.

Congratulations to all the longs... and don't forget that Youtube just passed up Yahoo as the #2 search engine... that is an amazing fact!

Blood In The Streets

Today marked one of the worst collapses in financial history as the Dow lost 778 points or almost 7% as the House failed to pass a bill for 750 billion dollars to help the credit markets. The Nasdaq had it even worse losing over 9% or 199 points! Brutal, absolutely brutal!

Now I hate to beat a dead horse, but if you are a long term investor this is not the end of the world. In fact, because in most cases the baby is getting thrown out with the bathwater there might even be some stocks worth owning that are looking very cheap. Unfortunately, this credit crisis has spread into mainstream and there is really no way to tell how long this will last. That is why it was so crucial to pass the bill that failed today. Every day that passes without a resolution will be a blood bath... sure not as bad as today hopefully, but who knows, there isn't any certainty what so ever which is very bad for stocks in general.

Now there are companies that I would still be picking up at this point. Let's all remember that there will be a tomorrow and a next week, next month and next year. The election is quickly approaching and both candidates are preaching investing in solar and wind power. So with that in mind I still like ESLR which was beaten up very badly by the fallout with Lehman Brothers and now stands at just over $6! I really can't believe it got that cheap, but the whole thing with Lehman Brothers caused a panic and the stock sold off. Another one I like at these levels is ORA Ormat technologies which today hit a fresh 52 week low at 36.39. These two companies are going to benefit from the next president, especially if it is Barrack Obama who has a real plan to change or energy structure.

I have said it before and I will say it again, Google GOOG is just an unbelievable buy at these levels. Today it fell $46 to $385, that's right $385! This gives it just a 25 P/E ratio! For a company that grows like Google this is very reasonable.

Now could everything crash again tomorrow and the next day? Sure, but how about 2-4 years down the line? The market will correct itself from time to time, this all be it is a real problem and we need congress to pass something ASAP, until then we will most likely drift lower.

As always, buy in increments and over time your investments will do fine. Good luck to all and most importantly don't panic...

Google Is A Screaming Long Term Buy

As I watched Google fall over 5% today I couldn't help but think there was some force pulling it down. I mean with the market up so much you would think that beaten down GOOG would shine, but just the opposite. Now in after hours Google announces a major partnership with NBC Universal to run TV ads. This stock has come down from $747 hard to find itself at nearly $420. With just a 27 P/E ratio this stock has literally never been this cheap! It really boggles the brain to even think about it. They have almost 13 billion in cash and are still raking in the money. Sure they are not smashing the park out of the numbers from last year, but you have to consider the law of large numbers and the fact that Google is throwing money in a lot of different places. They have the money to burn and they are taking advantage of that so they can reap the benefits in the years to come. I don't know about you, but I am going to be buying some Google, these price levels are just an unbelievable entry point.

Google Misses By 9 Cents... Big Deal

Today Google reported numbers that most companies would kill for. Revenues grew 39% year over year, but this still wasn't enough to keep the bears at bay. Analysts were looking for Earnings Per Share of $4.72 Google came in at $4.63. Revenues for Google's 2nd Quarter 2008 came in at 5.37 Billion, analysts were looking for 5.4 Billion. Of course, the knee jerk reaction to this created a sell off in after hours where Google (goog) fell about 7%.

Giving Google's already decent P/E ratio this earnings report has created a fabulous buying opportunity. There P/E ratio is currently 37, but after today's earnings report it will be closer to 32 based on a price of $490 per share! To put that into perspective Yahoo is trading at a 30 P/E ratio and Apple is trading at a 35 P/E ratio. Not to mention Google is sitting on 12.7 Billion in cash! That number alone is more than a lot of companies are even worth and Google can afford to just watch it collect interest.

Do your children a favor and go out and buy some Google stock while it is on sale. That is unless you think that Google, the Internet, Advertising and Youtube are just going to disappear. Just check out these slides below from the 2nd Quarter Earnings Report...

Yahoo Seals The Deal With Google

It is final, Google (goog) has official one the search engine race. Some people might think they had already won it, but with the announcement from Yahoo today that it will begin running even more Google ads with it search results, it's over. This will certainly be good for Google's stock price, which has lost a bit of steam after even it's last earnings jump. Obviously, the test that Yahoo was running with Google went well and this should be a win-win for both companies. They have also decided to link up their instant messages services, in another sign that they plan on becoming even tighter in the future. Sorry Microsoft! Here is the press release...

Google (Nasdaq: GOOG) today announced that it has reached an agreement that gives Yahoo! the ability to use Google's search and contextual advertising technology through its AdSense™ for Search and AdSense for Content advertising programs. Under the agreement, Yahoo! has the option to display Google ads alongside its own natural search results in the U.S. and Canada. In addition, Yahoo! can serve contextually targeted ads on its U.S. and Canadian web properties as well as on its current publisher partner sites. Yahoo will continue to operate its own search engine, web properties and advertising services.

In addition, Yahoo! and Google agreed to enable interoperability between their respective instant messaging services bringing easier and broader communication to users.

"This commercial agreement provides Yahoo! with the opportunity to deliver more relevant ads to users and provide advertisers and publishers with better advertising technology to help them succeed in their own businesses," said Eric Schmidt, Chairman and CEO of Google. "This agreement will preserve the competitive and dynamic online advertising space."

As a result of the agreement, Yahoo! will be able to complement its own advertising program with Google’s advertising technology. As a result, advertisers will be able to better reach consumers, and Yahoo! and its current publisher partners can generate more revenue. Yahoo can use Google's advertising technology on as many or as few of its search results and content pages as it chooses.

This non-exclusive agreement allows Yahoo! to enter into similar agreements with other advertising providers. In addition, Yahoo! will maintain relationships with its own advertising customers and will continue to rely exclusively on its own advertising program outside of the U.S. and Canada. The agreement has a term of up to ten years: a 4-year initial term and two 3-year renewals at Yahoo!’s option. Financial terms between the two companies were not disclosed.

Although Google and Yahoo are not required to receive regulatory approval of the arrangement before implementing it, the companies have voluntarily agreed to delay implementation for up to three and a half months to give the U.S. Department of Justice time to review the arrangement.

Take a look back at all our Google posts here!

Google Blows Out The Numbers!

Nervous Google investors got a big reassurance as Google (goog) reported 1st quarter earnings per share today 4-17-08 of $4.84 per share. The analysts were looking for $4.52 per share. Gross revenue rose 42 percent to $5.19 billion, analysts were looking for $5.13 billion.

With the ridiculous news coming out of comscore a few weeks back, the stock was punished for inaccurate comscore's paid click data. If you were paying attention you would know that Google had already told us that they were reducing bad clicks, and that there click data could suffer, but that it would generate higher revenue per paid click. Obviously, they were correct and comscore now has zero credibility! Here is a couple highlights from the quarter...

• Revenue growth of 42% Y/Y and 7% Q/Q
– Google properties revenue growth of 49% Y/Y and 9% Q/Q
– Network revenues increased 25% Y/Y and 3% Q/Q
– Growth in international markets continued to be strong, with $2.7 billion in Q1 international revenue

• Operational Highlights
– Improvements in search quality remain key focus
– Continued ads quality initiatives to show users better, more relevant ads
– Increasing value for advertisers and publishers with broader and deeper solutions

• Acquisition of DoubleClick gives Google the leading display ad platform
– Strong Apps traction and addition of functionality to Google Apps suite of products

Take a look a these slides from their earnings report and let me know if you notice a pattern...

Google's Quarterly Revenue Growth Graph

Google's US Vs. International Revenue Growth

In summary, I have been behind Google since very near the beginning and their growth has still only just begun the way I see it. If you have been waiting on the sidelines to jump in now is the time. Google's stock has been beaten down with the rest of the market unfairly, and they have silenced all the critics with this beat. The shorts are running to cover as Google is up over $80 in after hours!

Internet advertising and mobile advertising are the waves of the future because of their unique ability to target. This makes a for great return on investment for advertisers which is exactly what they are all looking for. The advertising market is estimated at 1 trillion dollars and Google is only going to capture more of that quarter after quarter, year after year. One of the best long term investments out there.

Think about this, many analysts had lowered their first-quarter estimates by 12 cents a share on average. So, 1st quarter 2008 earnings still beat by those lofty analyst's targets by 0.20 cents! Those same analysts that have price targets as high as $900... Google still beat them. This story is far from over...

For more reasons to own Google check out these posts...

Yahoo Tests Outsourcing Search To Google

The Google Checkout Effect

Google Misses By A Penny, Does It Matter In The Long Term?

Stock Outlook 2008

The Real Winner Of Cyber Monday Is...

Or you can view all of them on one page here!

Yahoo Tests Outsourcing Search To Google

In what could be considered the ultimate white flag of surrender Yahoo has agreed to begin using Google's Adsense for search to help boost it's revenue and fend off an increasingly hostile Microsofty. Even though this test is small at only 3% of search queries in The United States, just the fact that Yahoo is considering such a move shows you how much of a lead Google has on Yahoo's ad platform.

Analysts have been suggesting Yahoo try out this partnership a long time ago, and that Yahoo could actually benefit as Google generates more money for each search query, and has superior results. Google meanwhile managed to continue it dominance in search by gaining an amazing 67% of all US searches according to Hitwise, and most say that numbers for the world are even greater!

So, what does this mean for "low" Google's share price? Well, they report earnings on April 17th, next Thursday so I would say if you don't have a position already, I would be waiting on the sidelines till after the earnings report, or perhaps just dip your toes in the water and buy a little bit. Google's stock price has been hammered along with most of the Nasdaq this year falling from as high as $747 on the G-phone rumors.



The economy could weigh on Google's results this quarter, but I think that long-term Google will be one of the best investments in the Tech Sector. Microsoft is looking increasing desperate with it's very generous offer to buy Yahoo to form... uh Microhoo I guess. Yahoo, is meanwhile being distracted by this offer as their employees fear for what may be coming tomorrow.

Google on the other hand continues marching on... gaining market share and implementing quality controls to their ad platform that will in the end produce better results, and higher revenues.

That being said, if they miss the numbers the stock will drop, possibly even quite dramatically. If this is the case though, I will certainly be adding to my position as a slowdown in the economy can only last so long and Internet advertising will continue to grow for years and years to come as consumers increase their consumption online adding to Google bottom line. Plus, the Google Checkout Effect should help in the future as they compete with the entrenched Paypal and Google's new App Engine will add to their revenues as well once they start charging for it.

What are your thoughts on company's coming earnings report and it's long term prospects?

Appetite For Destruction Or Just Risk?

As an investor it is very important to realize where you are in your life, and what exactly your investment goals are. Generally, if you are a younger investor you can tend to take on more risk or more "speculative plays" if you will. Now, this doesn't mean you should go out and buy all risky stocks, you always need those stable dividend paying stocks.

In fact, one of the ways the rich get richer is that they just purchase a few high paying, stable, dividend paying stocks. Then take those cash dividends that you receive quarterly, and invest them into more speculative stocks. Once you make a bit of mad money on your speculative stocks, cash out some, or all of them, and re-invest into your high paying dividend stocks or other safer investments. Rinse and repeat...

Of course, this does take a lot of money/stock to generate much in the form of cash dividends, but it is none the less very possible. I am sure there are many rich investors out there taking advantage of it all the time. As a small investor though, you might just not be aware of this trick of the trade.

Now, if you are an older individual it is more important to have steady stocks that pay large dividends as you can use this as a source income. Not only this, but you should have a fair amount of bonds, mutual funds and even cds as a source of income. The most boring investments after all, are the safest, and that it what you need going into retirement.

So, before you invest make sure you know what your goals are... and be sure not to take on too much risk as you can get burned. Since this is Stock Picky, I will leave you with two long term investments. Google (goog) for all you young fellows out there... there's this new thing called the Internet perhaps you've heard of it, and Royal Bank Of Canada (ry) for all of you grey haired folks which pays out a hefty dividend and has always been dedicated to increasing shareholder value.

Good luck with all your investments and let me know if you have any questions...

The Google Checkout Effect

With the drop in Google's stock price over the past few months the question of how much Google Checkout could help the results next quarter comes to mind. After all, Google was literally giving it away for free for the past year, and it was one hell of a expensive promotion from the sounds of it!

Google stated that as of December 2007 they had signed up over 100,000 merchants and millions of users. Starting at the beginning of February Google began charging 2% + $0.20 per transaction. Just think of all that revenue that will now be added, instead of subtracted from Google's bottom line. These figures of course will continue to grow as more and more merchants see the benefits of signing up for Google Checkout.

Just listen to these statistics, Google says web shoppers who’ve signed up for Checkout are 10 percent more likely to click on an ad that features a Checkout button and 40 percent more likely to make an online purchase once they reach a site. In other words, if an online retailer uses Checkout and spends ad dollars on Google (GOOG), it improves the chance that shoppers will make purchases on it's site. These kind of stats are what will not only help retain Google's advertisers, but gain even more. Plus, have we already forgotten about the Yahoo disaster and how it will effect Google Checkout?


Is that enough reason to be bullish on Google? That is up to you to decide, but I think that Google is a global growth story that has really just gotten started. As the demand for instant information across the world drives their growth we will begin to see the true potential of one of the best long term stock picks out there.

One of the benefits of being a long term investor is the ability to focus on the future, especially in markets like these. If I wouldn't have been in certain stocks before this whole subprime meltdown started I wouldn't be able to identify these stocks as potential buys at these levels. Just because the entire market drags everything down doesn't necessarily mean these stock deserved to go down. Are companies like Google done growing their businesses, or is this just a readjustment of risk...

Want more Google? Check out this post...

Google Misses By A Penny, Does It Matter In The Long Term?

Well if you are a long term investor no, but the short term could be a little rough as people digest the numbers. First of all, let me just say that most companies would kill for these kind of numbers, but Google is not most companies.

Google (goog) reported revenues of $4.83 billion for the quarter ended December 31, 2007, representing a 51% increase over fourth quarter 2006 revenues of $3.21 billion and a 14% increase over third quarter 2007 revenues of $4.23 billion. Analysts were looking for $4.44 earnings per share and Google came in at $4.43, compared to $3.91 in the third quarter of 2007.

One very important number to look at is aggregate paid clicks, which include clicks related to ads served on Google sites and the sites of our AdSense partners, increased approximately 30% over the fourth quarter of 2006 and approximately 9% over the third quarter of 2007. This shows you that the core business of Google is still remarkable strong.

Google does not issue guidance so it is not too surprising that the analysts weren't right on. At any rate this stock has already been hammered the past month, and is continuing to get hammered in afterhours. It is trading at a major discount to just a month ago and after this earnings report it looks like it is going to create a great entry point. I know that I will be taking this opportunity to build to my position. Google is a global story, and as the world becomes more connected through the Internet Google will only continue this amazing growth...

For more information about Google stock check out this post.

Is Wall Street On Sale?

If your a long term investor, it is times like these that you need to be taking advantage of. The markets have just been terrible to start the year, losing everyday but today if your stocks are in the Nasdaq. As an investor you need to ask yourself, "does my stock have anything to do with Housing or a US bank", because if not the story behind when you invested in the first place hasn't changed. It might have simply been taken down artificially along with the rest of the market. Going on sale if you will...

The markets go up and the markets go down, the past week or two almost every thing has been going down though, no matter what sector. Try to focus on the future, the housing problem and the banking mess is only going to last so long. Global growth will trump any minor slowdown that we have here in the states in the long-term. Plus, the fed cutting interest rates is only going to bring the bulls back, especially if we get a quarter cut this next meeting.

Companies like Google, Boeing, Yum, Royal Bank Of Canada, and Vasco are all looking good at this level. Boeing (ba) is at a 52-week low even after it "blew past an order record it set two years ago, selling 1,413 commercial jets in 2007 while delivering 441 planes, its best showing in six years." Google (goog) unveiled several more partnerships at the CES (Consumers Electronics Show), but the market doesn't want to hear any good news at this point. Yum Brands (yum) is China the safe way, Royal Bank Of Canada (ry) has a fat and safe dividend yield. Vasco Data Securities (vdsi)is almost back to where it was after the last earnings fall. The bears have taken over all of these, and many more quality stocks. This historically means we are thankfully near the bottom.

It seems at this point though that we do need The Fed to act. If they don't we will get hammered again, whether we deserve it or not. I this that is half the reason the markets have been so jittery, no one really knows for sure what The Fed is going to do and that means fear...

Take advantage of this volatility, and pick up some of your favorites stocks on sale! Remember, you are buying over time, build a position in a stock, not buying it all at once. Another tip for market dips is to buy your dividend paying stocks. As a stock goes down it's dividend yield goes up, which means that you can get more cash or stock dividends for your dollar than you could have at a higher stock price. As a long term investor you should be owning these type of stocks for their steady dividend income.

Don't let panic cloud the future fundamentals...

Stock Outlook 2008

As another year comes to close, we can't just sit back and rest on our gains from the year that was 2007. Sure, Evergreen Solar (eslr), Ormat Technologies (ora), Yum Brands (yum) and the almighty Google (goog) were all great plays for this past year, but you have to ask yourself, what is next? What will be the best bull markets of 2008?

I believe 2008 will be the another year of the green! Alternative energy and any pollution reduction company will reign supreme as the governments around the world, (maybe even ours here in the states) begin to make these pressing issues a priority. It seems like you can't turn around these days and not hear something about climate change, pollution and expensive dirty energy. Stocks like Zoltec (zolt), which is one of the leaders in producing carbon fibers used in Wind Turbines, and Evergreen Solar (eslr) are going to continue their run in 2008 as more and more investors realize the explosive growth these industries can provide. With oil prices continuing to climb, manufacturing cost dropping due to government subsidies and a general increase in demand, the whole sector should do well. Solar, Geothermal, and wind power are the future, and now is your chance to make some green off of these clean renewable energy companies.

The next year will also be another year to watch China continue to expand at a insane pace. While I am not too fond of Chinese stocks, I think that Yum Brands is a way to get great Chinese exposure without investing in Communism. Kentucky Fried Chicken is opening up a store a day in China, and will only benefit even more with the buzz and increased traffic from the coming Olympics. There is a lot of opportunity in the Chinese market, but I just have something against a country that censors it's own news and internet. Enter at your own risk...

Two picks that have turned a bit soar since I recommended them, Boeing(ba) and Royal Bank Of Canada(ry), I still believe will do well in 2008. Sure, these are two of the less exciting stock picks out there , but that doesn't mean there not worth owning over the long term. Boeing has orders lined up for years to come with countries around the world, and Royal Bank Of Canada was brought down somewhat unfairly by the downfall in US banks. They both pay a dividend, BA at 1.78% and RY at 3.98% yields. Not only that, but both companies just raised their dividend in their last quarter, which shows the confidence the management has in their future income.

My last two are Vacso Data Securities (Vdsi) and Google, no real surprise there, I have been behind these two for literally years now, and I think they will continue to vastly outperform the market. Vasco is still looking cheap here after it's big fall, and Google will dominate in 08 with it's mobile business, the ever-growing monster that is Internet and those other 100 projects they are working on.

So, am I still worried about subprime, a weak dollar, a possible recession and falling home prices? Well of course, but these stocks are all long term investments, and can be bought over time and many different prices just like any other stock out there. Just remember, never buy all at once, and always do the proper research before you ever buy a stock. It also helps if you really are interested in what the company itself that you are putting your hard earned money into, this can make the research much less tedious.



Happy investing in 2008 from all of us at Stock Picky!

For more information on any of the companies above just click the company's name in the above article.

The Real Winner Of Cyber Monday Is...

With all the talk of retailers having to cut prices and in turn suffer though lower profit margins, shouldn't we be focusing on the bigger picture here? The mighty Google is the one directing a ton of traffic to all these different sites this holiday season. Not only that, but a smarter consumer that is looking for bargains is going to be more inclined to click on an ad or two while looking for the perfect price on a product. The more people that search for all these high tech gadgets and anything else they are looking for on the net the better...

More traffic = More Searches = More Money For Google

But wait there's more, in case you missed it Yahoo's server's weren't working for part of the day. Customer's couldn't even complete transactions through Yahoo on this all important Cyber Monday! Imagine all of those retailers that are going to come running over to Google Checkout... what better reason to switch then to have Yahoo let you down on one of the biggest days of the year! So guess where all those potential customer's went? That right, straight over to a site that allowed Google Checkout. With the Google Checkout promotion ending at year end this will certainly be a great future revenue stream for the big Goog.

So while I am continuing to be behind the Google Train, you had better think about waiting until after the next fed meetings coming up to be on the safe side, or just put on some now and some after the meeting. While I do believe the fed will cut, if they don't you will be able to get in at a lower price... Either way this is one of the best Long-Term holdings out there.

Google Beat's The Street Again

Nothing new here, Google (goog) blows past analysts estimates posting $3.91 earnings per share (eps) vs the estimated $3.78 that analysts were predicting. They also beat on revenues with 3.01 billion which is 70 million above what the analyst were looking for. Mind you this beat was already after many analysts had raised their estimates prior to the release, so the bar was already very high, and Google still had no problem beating!

The only blemish on the quarter was continued hiring by the company that spooked investors a bit in after hours trading. If you listened to the conference call though, they explained that some of that was due to the acquisition of Postini and some due to an overhang of people that were hired in the second quarter that didn't start till the third quarter. The management said that they would keep a watchful eye on hiring in the future as well.

Overall, this looks like another great quarter from the company that never seems to stop growing it's impressive bottom line. They have introduce serveral new ad formats for adsense and have just begun to start making money off of Youtube with the new overlay ads. Also, with the release of the I-Phone, mobile Internet use has only begun to hit and Google just released adsense for mobile which will pad the bottom line a bit next quarter! Basically, with the seasonally strong forth quarter coming up it is hard to find another stock out there with this much potential.

You might be thinking I can afford to buy a $600 stock, but don't forget that you don't have to buy a full share of a company like this and others with such a high price tag. You can buy partial shares though places like sharebuilder and other brokerages. Don't think you missed the boat either, because as grows the Internet grows Google. This is a worldwide play on the growth of the Internet and the push from traditional adverting into Internet advertising which is much easier to track through services like Google Analytics. Plus, with the Summer Olympics coming up in China and the presidential election next year things are only going to get better for this company.

For more information on how I see the Google Story check out these past posts...

Cramer Goes Ga Ga Over Google
Google Should I Stay Or Should I Go?
Putting A Value On A Stock
Evolution Of Traditional Advertising

Google Train And The Forming Tech Alliance

Tearing Down The Microsoft Monopoly

Some Basic Information About Stocks

You may think it is very hard to try and put a price tag on a stock and it is even harder to tell which direction that stock should be going, but there is a basic underline way to determine how to price any stock out there.

The first and most important thing to consider is a stock's PE or Price To Earnings Ratio. Now sure that may sound complicated, but it's really not. All you do is take this price of any stock, let's say for instance Royal Bank Of Canada (ry) which is trading at $57.56 a share and divide it by it's earnings per share which is $4.19. ($57.56/$4.19 = 13.61 PE) It is just that simple, Royal Bank Of Canada has a 13.61 PE or Price To Earnings Ratio!

So, all we do is apply this same logic to future earnings. Let's say Royal Bank Of Canada earns $6.25 next year and the market is willing to pay the same multiple 13.61 for the stock it would be at $85.06 per share. ($6.25 EPS * 13.61 PE = $85.06)

Basically, if a stock can continue to grow it's earnings and the market is willing to pay the same multiple or more for the stock it will go up naturally. Now, if earnings decrease the price will generally go down and so may the multiple that the market is willing to pay for the stock which is a double whammy.

Another thing to consider is that the higher the multiple the more "expensive" the stock is.... that is investors are paying more for future growth. Sometimes this can really pay off if the earnings are growing quick enough, but stocks with a high multiple that missed their earnings estimates can get hammered. Take Akamai (akam) for example, their recent earnings missed just made their stock drop like a rock due to the fact that their multiple was already so high that any kind of a miss would be ugly and it certainly was if you look at the 3 month chart.

Therefore, in general the stocks with the lower multiples can be much safer, but sometimes it can be worth it to pay up for growth. It all depends on what kind of an investor you are and how much risk you are willing to take on.

One last thing, the multiplies can be a good measure of comparing similar stocks, for instance Google and Yahoo. Google (goog) trades at $637.39 and has a PE of 54.18 while Yahoo (yhoo) trades at $28.48 with a PE of 55.55. So technical Yahoo is more expensive than Google! Yes that's right, even though Google is a $637 stock it is still cheaper than Yahoo at 28 smackers! Amazing really, especially since Google is growing faster than Yahoo which is what the multiple is really based on.

So next time you are trying to hunt for a stock, make sure to keep the multiple in mind and don't be afraid to compare it to it's peers. Let me know if you have any questions or comments and good luck to everyone this earnings season!

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...