You are now subscribed
Your newsletter sign-up was successful
Want to add more newsletters?
Delivered daily
Kiplinger Today
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more delivered daily. Smart money moves start here.
Sent five days a week
Kiplinger A Step Ahead
Get practical help to make better financial decisions in your everyday life, from spending to savings on top deals.
Delivered daily
Kiplinger Closing Bell
Get today's biggest financial and investing headlines delivered to your inbox every day the U.S. stock market is open.
Sent twice a week
Kiplinger Adviser Intel
Financial pros across the country share best practices and fresh tactics to preserve and grow your wealth.
Delivered weekly
Kiplinger Tax Tips
Trim your federal and state tax bills with practical tax-planning and tax-cutting strategies.
Sent twice a week
Kiplinger Retirement Tips
Your twice-a-week guide to planning and enjoying a financially secure and richly rewarding retirement
Sent bimonthly.
Kiplinger Adviser Angle
Insights for advisers, wealth managers and other financial professionals.
Sent twice a week
Kiplinger Investing Weekly
Your twice-a-week roundup of promising stocks, funds, companies and industries you should consider, ones you should avoid, and why.
Sent weekly for six weeks
Kiplinger Invest for Retirement
Your step-by-step six-part series on how to invest for retirement, from devising a successful strategy to exactly which investments to choose.
Scott Kessler has followed Internet companies as an investment analyst at Standard & Poor\'s since 1998. His rating on Google: Hold.
What\'s up with Google? The stock (symbol GOOG) started trading at $85 a share in August 2004 and recently hit $415. Is the run-up justified? Google did an excellent job delivering growth and financial performance. Earnings will grow an annualized 40% for the next five years. Its revenues from Internet search ads are eye-popping, approaching $10 billion this year. Yet the ratio of Google's stock price to its earnings growth rate is 1.3. That's cheaper than the tech average and the overall market.
So the stock's a bargain? No. I'm not telling people to sell the shares, but I'm not recommending them either. In 2006 and 2007, competitive issues will start to have an impact on the company's growth prospects and profit margins. A year ago Google had one decent competitor, Yahoo. Fast forward one year. You've now got a formidable competitor in Yahoo, focused and aggressive competition from Microsoft, and a wild card in Ask Jeeves, recently acquired by IAC/InterActive. I don't think a lot of people appreciate that Google is not diversified in terms of revenues.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Are there lessons we're missing from the dot-com disaster? This stock embodies a lot of strong emotions. Momentum players, who pile in when prices are rising and sell when prices reverse, are getting into Google. Wall Street analysts are by and large very bullish. All this is reminiscent of five years ago, just before the bear market. The obvious distinction is that Google is a profitable, ongoing operation. But when any stock goes from $85 to $415, prudence dictates that you take some money off the table. One of the lessons of the dot-com era is that prudence, more than patience, is a virtue.
Are there Internet stocks you like better? A few weeks ago I would have recommended Yahoo, but its price is no longer reasonable. We see better value in some small and midsize companies, such as IAC/InterActive (IACI). Besides Ask Jeeves, its brands include Home Shopping Network, LendingTree and Match.com. We also like RealNetworks (RNWK), a bear-market survivor and a leading provider of subscription music and games.
-
How Much It Costs to Host a Super Bowl Party in 2026Hosting a Super Bowl party in 2026 could cost you. Here's a breakdown of food, drink and entertainment costs — plus ways to save.
-
3 Reasons to Use a 5-Year CD As You Approach RetirementA five-year CD can help you reach other milestones as you approach retirement.
-
Your Adult Kids Are Doing Fine. Is It Time To Spend Some of Their Inheritance?If your kids are successful, do they need an inheritance? Ask yourself these four questions before passing down another dollar.
-
How the Stock Market Performed in the First Year of Trump's Second TermSix months after President Donald Trump's inauguration, take a look at how the stock market has performed.
-
What the Rich Know About Investing That You Don'tPeople like Warren Buffett become people like Warren Buffett by following basic rules and being disciplined. Here's how to accumulate real wealth.
-
How to Invest for Rising Data Integrity RiskAmid a broad assault on venerable institutions, President Trump has targeted agencies responsible for data critical to markets. How should investors respond?
-
What Tariffs Mean for Your Sector ExposureNew, higher and changing tariffs will ripple through the economy and into share prices for many quarters to come.
-
How to Invest for Fall Rate Cuts by the FedThe probability the Fed cuts interest rates by 25 basis points in October is now greater than 90%.
-
Are Buffett and Berkshire About to Bail on Kraft Heinz Stock?Warren Buffett and Berkshire Hathaway own a lot of Kraft Heinz stock, so what happens when they decide to sell KHC?
-
How the Stock Market Performed in the First 6 Months of Trump's Second TermSix months after President Donald Trump's inauguration, take a look at how the stock market has performed.
-
Fed Leaves Rates Unchanged: What the Experts Are SayingFederal Reserve As widely expected, the Federal Open Market Committee took a 'wait-and-see' approach toward borrowing costs.
