Google's Lag Lingers

Updated from 11:12 a.m. EDT

Five full months into 2007, Google(GOOG Quote) shares are on track to be the worst performer among Internet giants this year.

The stock, which closed Friday at $483.52, has traded sideways since the start of the year and is up only 4% since early January 2006. And the shares continue to command a remarkably poor valuation, especially considering the company has delivered nothing but stellar earnings and is tagged with enthusiastic buy recommendations by a number of high-profile investment banks.

Google trades at only 25 times forward earnings -- lackluster by Internet standards, particularly given the bullish growth forecasts by many on Wall Street. "Internet stocks historically carry PEG multiples [a combined ratio of valuation and growth] closer to 1.5x," American Technology Research analyst Rob Sanderson wrote in a research note last week. "But Google is only half this ratio despite being the clear powerhouse." ...