The Case to Buy Google Inc (GOOG) in 10 Charts

Page 1 of 2

Google Inc (NASDAQ:GOOG) hit a record $800 on Tuesday. Yet despite the rally, shares of the search engine giant are still worth buying thanks to the company’s burgeoning digital empire and reasonable valuation.

Google Inc (NASDAQ:GOOG)

Great core business

Google Inc (NASDAQ:GOOG) continues to dominate the search business. According to a recent report from comScore, Google now accounts for 67% of online queries in the United States. Microsoft Corporation (NASDAQ:MSFT)’s Bing has been gaining market share with 16.5% of searches, but this come mostly by pushing out Yahoo! Inc. (NASDAQ:YHOO) and other smaller players. The industry appears to be moving towards a two-player duopoly.

While Google Inc (NASDAQ:GOOG)’s search engine is a cash flow machine, the company’s growth rate has been in steady decline.

This left the Street wondering what the company’s next growth driver would be.

The Androids are coming!

Google Inc (NASDAQ:GOOG) answered this concern with its Android operating system. With over 500 million devices activated, Android represents a huge opportunity for Google Inc (NASDAQ:GOOG) to exploit for additional advertising and application revenue.

The company’s strategy to release the platform to hardware manufacturers for free proved to be wildly successful. Five years after its launch, Android is now jockeying with Apple Inc. (NASDAQ:AAPL)’s iOS for top spot in the U.S. smartphone market.

Android has also been remarkably successful internationally. In China, the world’s largest smartphone market, Android powers 90% of all devices sold.

The green Android monster is gobbling market share and keeping Apple shareholders up at night.  Apple has struggled to compete against Android in China. The iPhone is significantly more expensive and the company has had difficulty securing distribution deals. This market share slide could be reversed if Apple can secure an agreement with China’s largest carrier China Mobile Ltd. (ADR) (NYSE:CHL).

Suite of new products

Google Inc (NASDAQ:GOOG) has also been successful at a host of other ventures.

Tablets: The company released its Nexus 7 tablet late last year and the launch has been better than expected. Based on estimates from Google’s component suppliers, Nexus sales are exceeding one million units per month.

Cloud Computing: Google is building massive data centers where businesses and consumers can store information and run applications. With most applications moving to the cloud, the PC may become little more than a screen with Internet access.

Social Networking: Google+ has emerged as the internet’s most underrated success story (yes, I will go on record saying that) with the site cracking 400 million members last year. According to Trendstream, 25% of Google+ members were active in the past month, second only to Facebook Inc (NASDAQ:FB).

Double-digit growth

These ventures are sexy and all, but what kind of returns has the company delivered for investors?

Google has posted 25% annual top-line growth over the past four years.

But not all of this revenue growth has translated to the bottom-line. Google has been routinely criticized for failing to control costs.

Most of this expense is investment in research and development. Given Google’s innovation track record, I’ll give the company a pass.

Page 1 of 2
Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

The Best B-Boy Movies

Most Awesome Hip Hop Documentaries

Foods That Stain Your Teeth

Richest Doctors in the World

The Best Movie Sountracks Ever

The Highest Grossing Musicals on Broadway

The Most Successful Reality TV Stars

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!