Hello Again, Google!

It's been a long time since your stock showed such strength. If my memory serves me correctly, it was after you released 4th quarter earnings back in January. Shares plummetted from an all-time high of around $470 to this year's low of about $340. That's when everyone came out screaming at the top of their lungs that Google was grossly overvalued.

I didn't believe them, though. When a company with strong fundamentals issues a "bad" earnings release, it doesn't mean the end of the world. So when there was weakness in their shares, I picked up a few shares for some of the accounts I control. True, it dipped about $20 a few days after my purchase, but it didn't matter. Google is a "long-term hold" in my book. And lo and behold, we're back up to the high $440s and low $450s. See what being patient can do?

Anyway, Google reported a 60% increase in profit, driven largely by a 92% increase in sales. Analysts and brokerages alike are raising price targets and eps targets for Google left and right.

• JMP Sec. ups Google price target to $500 from $475
• Google price target raised to $530 at Lehman Brothers
• Goldman Sachs raised its 2006 earnings estimate to $9.39 from $8.87 a share and its 2007 earnings forecast to $12.70 from $11.85 a share. Goldman said it believes Google continues to maintain its edge over Yahoo

To me, analysts have to have a short term view. They can't just assume that everyone is a buy and hold investor like I am. So in that respect, I don't put that much stock into short term valuation. (Don't get me wrong, I still do. But that's not the main factor). One man's overvalued stock, is another man's high growth potential stock. For companies that are really trying to push growth, like Google (like Starbucks too), there'll always be a high P/E associated with it. Doesn't necessarily mean it's overvalued. Maybe their earnings per share is growing at a rate faster than their share price. And since Google is notorious for giving no guidance to analysts, you really never know. But you can see their growth - through a new Google This and Google That coming out practically daily.

Sorry, I digress. Anywho, the point is, if you really think your company is strong, a large pullback in shares could only signal a buying opportunity.*

*When shares plummet because of scandals or fraud, that's bad. You shouldn't buy on that type of weakness...