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Why Google Inc (GOOG) Stock Is Trouncing the Market in 2013

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The first six months of 2013 have been good to Google Inc (NASDAQ:GOOG) and those who hold Google stock. Though we Fools know that six months doesn’t make or break an investing thesis, it’s always good to periodically check in on your holdings.

And if you hold Google Inc (NASDAQ:GOOG) stock, you’ve got to be pretty happy with what you’ve seen thus far.

GOOG Total Return Price Chart

GOOG Total Return Price data by YCharts.

Though Google Inc (NASDAQ:GOOG) was about even with the S&P 500‘s return back in mid-April, it has surged nicely and is now outperforming the market by over 11 percentage points on the year. If we take a closer look at the events of the last six months,

three dates in particular stand out.

Source: YCharts.

In late January, Google Inc (NASDAQ:GOOG) came out with an earnings report that pleased Wall Street. Revenue increased a whopping 36% year over year — though that would have been a more tepid 22% without the Motorola acquisition — but earnings per share jumped just 5%.

Google Inc (GOOG)

Though it might seem troublesome when a company’s earnings growth doesn’t at least match its revenue growth, ever since CEO and co-founder Larry Page took the helm, he has telegraphed that the company will be spending money to build out its infrastructure and develop a cohesive mobile advertising strategy.

What really pleased investors was the fact that cost-per-click values began to stabilize. As Android has been able to deliver more and more mobile advertisements, investors worried that the amount businesses paid for these ads would continue falling. But when Google came out with these numbers, it became easier to see how Google’s future was still bright in light of a shift to mobile advertising.


Source: YCharts.

When first-quarter earnings came out in mid-April, the good news continued. Revenue increased by 31% year over year — though, again, it would have been 22% without the Motorola acquisition — and earnings per share jumped 13%.

Though cost-per-click showed a little weakness — dipping 4% from the previous quarter — the overall number of paid clicks increased by a dramatic 20% over the previous year. Furthermore, CEO Larry Page spent a lot of time on the conference call talking about “big bets” that the company was willing to make — a la YouTube, Android, Chrome, and even Google Glass — in order to continue driving innovation in the technology ndustry.

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