Just a couple of months ago, Apple's stock was speculated to hit $1,000 a share. Gene Munster, a Piper Jaffray analyst, joined the fray by releasing an extensive research note presenting ten key factors why Apple's stock would cross this $1,000 milestone.
However, it seems Apple’s stock peaked on September 19th, 2012, and has been on a downward spiral ever since. I missed my chance to short the stock in September, as I monitored this “Is AAPL a short at my target price?” conversation on MarketConsensus.com. I kept thinking maybe I should pull the trigger and short the stock. I never took action on that prevailing sentiment, and now the stock seems to be bottoming out. Nevertheless, I don’t see myself trading it anytime soon.
But all is not lost. Looks like I might be able to redeem myself and make some really good money in this volatile market in the form of Google (GOOG). The company reported a strong third quarter (Q3) with revenues of $11.5 billion. This does not include the $2.6B Q3 revenue earned by Motorola, acquired by Google in May of this year. While total advertising revenues grew by 16% (year over year), what is most impressive is the growth in its non-core business, where “Other Revenues” grew by a staggering 73% (year over year). Nevertheless, stock analysts were “deeply disappointed” that Google’s numbers did not live up to their estimated forecast, and the stock took a hit after it released its Q3 revenue numbers.
In addition to increasing revenue, Google also has a solid financial position with a debt to capital ratio of 8.36% compared to the industry average of 29.01%. It holds substantial cash and cash equivalents to the tune of $45.7B. With such a treasure chest, it can fuel its growth, expand on innovative products, pay dividends and limit its financial risk. Google’s revenue growth is also outpacing the industry average of 44.4%.
Google has a lot more going for it. According to a recent Credit Suisse Equity Research report, the firm “is in the process of building a comprehensive mobile presence, which would place it (along with Apple) at the center of the mobile Internet ecosystem and allow Google to maximize the profit potential. We continue to think of mobile Internet as a significant incremental opportunity for Google.”