Is Google Inc (GOOG) A Good Stock to Buy?

Google’s move into tablets and smartphones has left it competing with other tech giants such as Apple, Amazon.com, Inc. (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT). We don’t think that Amazon is a good value; despite its transformative business, the company is unprofitable and has a market capitalization over $110 billion. We have the opposite take on Apple. At a trailing P/E of 12, earnings would probably have to fall for the stock to prove overvalued, and given the strength of its markets we think that it should be able to manage at least modest growth. Microsoft is a more complicated situation. It’s not clear that Windows 8 is going to have a particularly strong release, and it certainly doesn’t look like the Surface tablet is going to help the company much- to the degree it does at all, it may be by whipping other hardware manufacturers into releasing a variety of high quality products running Windows. Microsoft’s current-year P/E for the fiscal year ending in June 2013 is 9, but that likely includes a one-time boost from Windows and Office releases and so we’re not sure it’s that good a value.

We can also compare Google Inc (NASDAQ:GOOG) to Research in Motion Limited (NASDAQ:RIMM). The stock has doubled in the last three months, as despite financial troubles- it was unprofitable in the last two quarters as consumers have abandoned its offerings for smartphones from Apple and Google- tech followers are counting on the new Blackberry model to deliver strong sales numbers and save the company. The market cap is now $7.3 billion, and while we wouldn’t buy at this time we’re following Research in Motion closely.

Google Inc (NASDAQ:GOOG) has good growth prospects from this point, though the multiples don’t look particularly attractive. Even after expected growth for 2013, it would be trading at a higher multiple than Apple, for example, and likely well higher than Microsoft. We’re tracking company news but wouldn’t quite call it a buy until Google shows that the Motorola acquisition is going to contribute positively to earnings.