ChartWatch: Glass is Google’s Ace in the Hole
Google ( GOOG ) is my favorite company. Ask anyone in my office, and they'll certainly confirm. I'm a shareholder and have no plans to sell - even after GOOG hits $1,000 , which I expect to happen in a few years.
But even my optimistic view may not be cheery enough.
Technology guru, investor and philanthropist Marc Andreessen
thinks Google Glass is going to be a game changer.
Before trying Google Glass, Andreessen admitted that he sympathized with consumers about the product. Many people seem unable to understand the product, and don't believe it's something that can go mainstream.
"You put it on and you're like 'Oh my God, I have the entire internet in my vision. Where have you been all my life?" was his reaction after wearing Google Glass for the first time. Though I haven't tried the product, I trust Andreessen's response.
Google Glass is in a league of its own. There's nothing out there like it. For the time being the product may be reserved for early adaptors, but I believe it has potential. The acceptance of technology products is always challenging to predict. For example, AT&T ( T ) had consultants estimate the future demand for cell phone devices. The research (compiled in 1980) concluded that by the year 2000 there would be demand for about two million cell phones.
Though I don't know with any certainly whether it will take two years or 32 years for Google Glass to gain acceptance, I have zero doubt that wearable devices - like Glass - will gain widespread acceptance.
But Glass isn't the only reason to buy GOOG. The shares have a
P/E ratio of 17.5 and a forward P/E ratio of 15. Google has
historically carried a P/E ratio near 23. Among 34 analysts, 27
rate it a buy with an average price target of $887.
The chart also looks great. ChartWatch recommended selling GOOG near $700 last October , and buying it back below $650. GOOG briefly traveled below the $650 mark (blue dot) before vaulting above $800. That's the third time I've correctly timed a bullish turn in the stock (blue arrows).
The shares have been consolidating nicely during the past several weeks. This coiling action indicates GOOG is ready to make a big move. Though that direction could be up or down, I suspect it will be to the upside as the company is undervalued. There's also a strong support zone near $745 to help prevent a large sell-off. My short-term target is $880, although I expect much higher prices over the long term.
This chart shows the price of GOOG shares along with an important support level to monitor.
Equities mentioned in this article: GOOG, T
Positions held in companies mentioned above: GOOG