Google Target $350 at Lehman--GOOGLE GULPING AGAIN!

Google Target $350 at Lehman

Last week I purchased more Google--in a friends IRA account. I made the mistake of mentioning the purchase to a long time reader who pinned my ears back! She asked how I could possibly justify putting Google in a retirement account?

Why not? The allocation made was less than 2.5% of the portfolio. A portfolio that also owns low beta high dividend stocks such as Conagra. The proof is always in the pudding and I am thankful to be able to write that GOOG has quickly moved up 14 points since the purchase. On a $293 base, 15 points is only 5% but still not bad in a week.

The real point has nothing to do with short-term performance. The fact is that this retirement account will not even start being withdrawn for another 20 years and will still be large in assets in 40 years. When you have a long time to stay in stocks then it is a good idea to own at least a few growth stocks.

I have made no bones about the fact that I like Google. I have bought it regularly since it was first offered and I will continue to buy as long as I believe it offers value. I have indicated in the past that I might sell some shares after the stock is added to the S&P 500. Value is often in the eye of the beholder. It is hard to measure. Some folks rely on P/E ratios to measure a stocks value but what meaning does a P/E ratio have when a company has a clear path to extraordinary growth? Crammer arrives at $350 on the stock using $7 as projected earnings and a 50 multiple. Using a 50 multiple is just another way of trying to justify buying a stock that has tremendous growth potential. The important thing for any company is the projected bottom line over future years. In other words, buying a stock always requires one to make educated guesses. My hunch is that Google has many more years of growth ahead. By the way, the same IRA account allocated 2% to EBAY. Time will tell if this was a wise choice or not.

The opportunities for increases in Google's earnings are unusual. The company can go in so many directions and yet it continues to be focused on its primary strategy. Ebay has a very different strategy but both companies are working hard to be big in China because China is very big.

I will buy more stocks after the opening this morning. The purchases will not be GOOG or Ebay. I will not write much today as I am currently watching the waves roll in at Myrtle Beach. Some of my family arrived after 2 AM this morning so several are still asleep. Life is good.

BUY THE BULL! IN CASE YOU HAVE NOT NOTICED, TECH STOCKS AND OTHERS ARE BREAKING TO THE HIGH SIDE. INFLATION REPORTS THIS MORNING WERE OUTSTANDING. BOND YIELDS ARE DOWN THIS MORNING. THE ENVIRONMENT FOR STOCKS COULD NOT BE MUCH BETTER!