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Strategies & Market Trends : Value Investing

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To: Paul Senior who wrote (33147)	12/31/2008 12:16:34 PM
From: Jurgis Bekepuris	Read Replies (2) of 78627

You may be right that GOOG is a buy here. However, every way I look, the stock is not cheap. With 18% ROE the expected return is about 11% annual which is very low in this market and not a buy even in a bull market. Heh, Pepsi and Coke have expected returns higher than GOOG. Even assuming 20% growth and 20PE the return is only about 28% going forward, which is again very low in this market. Even accounting for cash on balance sheet, the earnings yield is very low compared to anything else. Great company, still very mediocre investment IMO. On the other hand you may pull a Bill Miller AMZN with your GOOG. If economy recovers, such a blue-chip-growth company may recover the fastest and the most.

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