Buy Google (GOOG)? Say It Ain't So, Cramer!
Tweet
Share
E-mail
Get Alerts GOOG Hot Sheet
Join SI Premium – FREE
Google (Nasdaq: GOOG) shares are trading lower today, as Jim Cramer is sending mixed signals to investors about which direction that they should take with their investments.
Recently, Cramer hashed it out with colleague Dan Fitzpatrick to take on Google from a technical and fundamental prospective.
Fitzpatrick said that shares have been trading in a range of $550 to $630 per share, which is true if you're only looking back to last October. GOOG shares jumped following solid third quarter results from the search giant. Fitzpatrick says that shares have tried and failed to cross the $630 resistance level several times since then. He continues that gains have been made on lighter volume, while selling has been heavier, indicating profit taking by larger institutions.
Google's charts reveal that Bollinger bands have been widening, indicating increasing volatility, coupled with a recent decline through the $550 support level. He sees a sharp 7% decline in the shares before any recovery.
On the other hand, Cramer disagrees with Fitzpatrick. Fundamentally, Cramer notes that Google goes for just 14x forward earnings with an 18% long-term growth rate. Online advertising is improving, and Google's Android mobile OS has become a dominant player in a rapidly expanding market.
Cramer suggests dividing the shares by ten to make the numbers easier to swallow. In that case, a $60 stock pulling back to $55 isn't such a big deal. He thinks shares are cheap, and recommends deep-in-the-money call options as a way to "pick some up on the cheap."
The suggestion may be a mixed signal to Cramer followers, as Jim is always touting Apple (Nasdaq: AAPL) for their innovation and product line. Apple is a direct competitor with Google on many fronts: mobile OS, advertising, maps, etc. Google and Apple will also compete on several new fronts in the future, potentially having both in your portfolio a semi-wash sale. Potentially.
Google shares are down 0.8% on the day.
Recently, Cramer hashed it out with colleague Dan Fitzpatrick to take on Google from a technical and fundamental prospective.
Fitzpatrick said that shares have been trading in a range of $550 to $630 per share, which is true if you're only looking back to last October. GOOG shares jumped following solid third quarter results from the search giant. Fitzpatrick says that shares have tried and failed to cross the $630 resistance level several times since then. He continues that gains have been made on lighter volume, while selling has been heavier, indicating profit taking by larger institutions.
Google's charts reveal that Bollinger bands have been widening, indicating increasing volatility, coupled with a recent decline through the $550 support level. He sees a sharp 7% decline in the shares before any recovery.
On the other hand, Cramer disagrees with Fitzpatrick. Fundamentally, Cramer notes that Google goes for just 14x forward earnings with an 18% long-term growth rate. Online advertising is improving, and Google's Android mobile OS has become a dominant player in a rapidly expanding market.
Cramer suggests dividing the shares by ten to make the numbers easier to swallow. In that case, a $60 stock pulling back to $55 isn't such a big deal. He thinks shares are cheap, and recommends deep-in-the-money call options as a way to "pick some up on the cheap."
The suggestion may be a mixed signal to Cramer followers, as Jim is always touting Apple (Nasdaq: AAPL) for their innovation and product line. Apple is a direct competitor with Google on many fronts: mobile OS, advertising, maps, etc. Google and Apple will also compete on several new fronts in the future, potentially having both in your portfolio a semi-wash sale. Potentially.
Google shares are down 0.8% on the day.
Are you missing key trading opportunities? Upgrade to StreetInsider Premium and get a step ahead of the market - FREE TRIAL!
Create E-mail Alert Related Categories
Insiders' BlogRelated Entities
Jim Cramer, EarningsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
