I was recently reading about all the interesting things that Google is doing. How they are integrating Android in automobiles, specifically among other things, and I saw that GOOG has not only been recommended along the way by my two favorite MF newsletters, but it is a Core Stock in both newsletters. Sounds good doesn’t it?
But then when I look closer I find that this is a company that is already huge, whose Revenues are already over $10 billion per quarter!. I wonder how much room do they have to grow? Can I realistically see them tripling their revenue any time in the next half-dozen years?
Then I look at their rate of growth: Revenues were up 20% for the first 9 months of 2013 (we don’t have the December quarter yet), but Earnings were only up an average of 9.5% during the first nine months, or 10% if we look at the trailing 12 months. Earnings are growing at half the rate of Revenues. Bad sign.
Okay, convince me. Why should I start a position in this elephant of a stock when there are lots of gazelles and cheetahs recommended by the MF? What am I missing? I already know GOOG does a lot of neat things. I’m wondering about growth, and why earnings growing at half the rate of revenues, and where they can realistically go at the size they are.