'RealMoney' Radio Recap: Google's Gonna Bat $500
Jim Cramer upped his price target for
(GOOG), to $500 from $450 on his
Cramer called Google the "fastest-growing company in the world" and the "greatest equity phenomena of the 21st century." He raised his price target based on his estimate that Google will earn $10 a share in 2006.
The average stock trades at about 18.5 times earnings and is growing at about 10%, Cramer said. Google is growing about three or four times as fast as the average stock, so Google should trade at a multiple of at least three times 18.5, Cramer added. That would put Google at $550. "No wonder it keeps going higher."
Cramer said Google is cheaper, based on 2006 earnings, than other well-known growth stocks such as Electronic Arts (ERTS), Whole Foods Market (WFMI), Yahoo! (YHOO) and Amazon.com (AMZN). The market loves to find stocks growing "furiously" that are selling for less than what other growth stocks are selling for, he said.Cramer said Google's success stems from its value proposition. Google allows "everybody to have every bit of information at their fingertips around the world" for free, he said, and advertisers are able to target their ads precisely. It's the "greatest value proposition," he said, adding that Google will wipe out every section of the newspaper. Cramer recommended -- if one doesn't already own Google -- purchasing one share on any pullback and buying an additional share each 20 points the stock may drop until one owns 5 shares. Google is the "fastest-growing and most lucrative company in an era where growth is hard to come by." Based on 2006 earnings, "Google is a true bargain," said Cramer, and is "not done going up." "I need you in Google," he said.
Danger ZoneCramer's Danger Zone stock Tuesday was Aeropostale (ARO). Cramer said Aeropostale had extended its 50%-off sale by a week. When a retailer makes a move like this during the holiday season, it usually "means you're hurting," said Cramer. He believes that Aeropostale could be having a shortfall. "Sell the stock right now," he said.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV