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Watch For Today's Momo Momentum Stock: Google (GOOG)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Google ( GOOG) as a momo momentum candidate. In addition to specific proprietary factors, Trade-Ideas identified Google as such a stock due to the following factors:

  • GOOG has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $3.8 billion.
  • GOOG has a PE ratio of 33.8.
  • GOOG is currently in the upper 30% of its 1-year range.
  • GOOG is in the upper 25% of its 20-day range.
  • GOOG is in the upper 35% of its 5-day range.
  • GOOG is currently trading above yesterday's high.
  • GOOG has experienced a gap between today's open and yesterday's close of 0.6%.

'Momo Momentum' stocks are valuable stocks to watch for a variety of reasons including historical back testing and price action. Market technicians refer to such stocks as being in a mark-up phase before a possible distribution period and price decline. Technical analysts and traders frequently find that the factors referenced above tend to create a temporary burst of strong wind in a stock's sail. Nevertheless, all successful traders must excel at maximizing gains while keeping losses to an absolute minimum. For that reason, the holding period on momo momentum stocks must always be a primary consideration, and this part of the puzzle is ultimately at the discretion of each individual's risk tolerance and portfolio risk management skills.

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More details on GOOG:

Google Inc., a technology company, builds products and provides services to organize the information and make it universally accessible and useful. GOOG has a PE ratio of 33.8. Currently there are 26 analysts that rate Google a buy, no analysts rate it a sell, and 4 rate it a hold.

The average volume for Google has been 2.0 million shares per day over the past 30 days. Google has a market cap of $325.8 billion and is part of the technology sector and internet industry. The stock has a beta of 0.90 and a short float of 1.5% with 1.24 days to cover. Shares are up 5.1% year-to-date as of the close of trading on Monday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Google as a buy. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, growth in earnings per share and compelling growth in net income. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results.

Highlights from the ratings report include:

  • GOOG's revenue growth has slightly outpaced the industry average of 16.7%. Since the same quarter one year prior, revenues rose by 16.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Although GOOG's debt-to-equity ratio of 0.06 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 4.28, which clearly demonstrates the ability to cover short-term cash needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 50.61% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, GOOG should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • GOOGLE INC has improved earnings per share by 14.2% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, GOOGLE INC increased its bottom line by earning $36.04 versus $32.47 in the prior year. This year, the market expects an improvement in earnings ($51.98 versus $36.04).
  • The net income growth from the same quarter one year ago has exceeded that of the S&P 500 and the Internet Software & Services industry average. The net income increased by 17.0% when compared to the same quarter one year prior, going from $2,886.00 million to $3,376.00 million.

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