This column was originally published on RealMoney on Nov. 21 at 12:54 p.m. EST. It's being republished as a bonus for TheStreet.com readers. For more information about subscribing to RealMoney, please click here.
When will people understand that it is, in the end, the P/E -- the price of the stock divided by the earnings -- that controls?
I have been inundated with questions about where
can go, as if it's a plane that is breaking the sound barrier and people want to know if it can possibly get to Mach 5. You have to figure out what Google is worth based on what it will earn and what people will pay for it.
I don't understand why Google doesn't command the highest multiple in the market, something like 55 times, but the absurdity of saying $825 to those who don't understand this kind of analysis causes immense problems.
People think you get it out of thin air.
Google is going higher. It is going higher now.
Because getting to $600 -- where it is valued at only 40 times earnings -- seems, alas, not that hard.
When it gets there, I will leave it to those who like to clock the velocity of planes.
At the time of publication, Cramer had no positions in any of the stocks mentioned in this column. Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. Outside contributing columnists for TheStreet.com and RealMoney.com, including Cramer, may, from time to time, write about stocks in which they have a position. In such cases, appropriate disclosure is made. To see his personal portfolio and find out what trades Cramer will make before he makes them, sign up for
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