Finding the Next Google

NEW YORK ( TheStreet) -- Like looking for a diamond in a sea of glass, investors and analysts comb through the tech sector hoping to find a company that might perform like Google ( GOOG).

One of these days the formula, the secret strategy for uncovering a technology company whose shares could soar by 1,000% or more will be found. That's the good news. The not-so-good-news is that we haven't found it yet and are still compiling the "ingredients" and the clues.

If you'll bear with me while I wax bullish, all we have to do is try to understand what made GOOG the superstar that it is and what characteristics (including its remarkable culture) it possesses, and we will have made a giant leap in the right direction.

The latest news about Google is that it's now the most widely owned stock among the 50 largest actively managed U.S. mutual funds. According to a March 7 Bloomberg report, the world's largest search engine company beat out Apple ( AAPL) to claim the top spot.

The article pointed out that... "Google's shares are now trading at about 25 times profit, compared with a price-to-earnings ratio of less than 10 for Apple, according to the data compiled by Bloomberg. That gap is at its widest since June 2005, two years before competition between the two companies in mobile devices began to intensify."

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This is how great technology companies leap ahead of the competition and separate themselves as the undisputed leaders. Google's smartphone software controls around 70% of that market. Its Chrome browser has been taking off as well. As the company's nifty Web site reminds potential users "Browse fast with the Chrome web browser on your Android phone and tablet. Sign in to sync your Chrome browser experience from your computer to bring it with you anywhere you go."

Here's a two-year visual illustration of how Google has become the new "darling" of the technology world. Its shares have done so amazingly well compared to Apple's stock. Many of us were surprised by Google's ascent above AAPL.

So which company will be the next Google? It might be one that is an innovator in products and services for tablets, smartphones, apps and digital advertising. The apps business is still in a state of flux as users around the globe upgrade to the latest mobile devices. Savvy tech buyers are still deciding if they want to spend money on apps that impress them, or go for the hundreds of thousands of free apps.

Perhaps the next Google will be a hybrid combination of two or more existing companies. For instance, a dark horse like BlackBerry ( BBRY) could team up with a company such as Nokia ( NOK) to compete in the growing market for less-expensive mobile devices.

If a tech titan like Oracle ( ORCL) took some of its $33.7 billion and acquired companies like BBRY and NOK (which it easily could afford to do) a new contender might emerge. Stranger things have happened in the world of big technology surprises.

With ORCL's seemingly endless array of software platforms, business intelligence analytic applications, Web commerce, and industry-specific applications software products it could dominate the many millions of mobile device users who want to conduct business on the same smartphone that they chat with family and friends.

In the final analysis, the next Google may be a start-up company we've never heard of that won't be going public anytime soon. But as our imaginations run wild, consider my combination of ORCL, BBRY and NOK in a merger-marriage with a company like Yahoo! ( YHOO) with its search engine expertise and legions of loyal customers and, well, you might just have the ideal recipe.

In the meantime, GOOG shares are receiving the kind of publicity and upgrades that AAPL used to receive. On Monday RBC Capital reiterated an outperform rating for GOOG and raised it price target to $950 from $840.

One lesser-known firm, Pacific Crest, and its tech analyst Evan Wilson reiterated an outperform for GOOG, and Wilson raised his price target to $980 from $820. He recently wrote that the company's reputation of having "uninspired management and that was unable to find success outside its core due to regulatory issues" has changed and that GOOG is now perceived as a tech leader.

It appears GOOG is "the" tech leader when it comes to its core competencies, and that makes it even harder for another company to catch it. Perhaps the next GOOG won't be doing the same things or even in the same industry.

Maybe it's a regional fast-food chain we've not discovered yet that is making edible cellphones and tablets the customers can use for a while and then literally "consume." It would certainly change the meaning of the word "consumer."

All jokes aside, if we want to find the next Google we'd be better served looking for the next breakthrough that's likely to change the way people live their lives and make their living. We at TheStreet will do our part to search and scour the world of business and investments for the most likely candidates and pass them on to you on a regular basis.

Word to the Wise: Whether you own shares of a stock that trades for $800 or for $8 a share, you'll want to remember rule #1 of investing: "Don't Lose Money." Using a stealth trailing stop loss alert system can help you manage downside risk while striving to let your winners "run."

It behooves all traders and investors to know what a trailing stop loss is and how to use one that the Market Makers can't see or "pick off". This way you have more control over your investing results, and from my experience it lets us invest hoping to find the next Google yet keeps us focused on "rule #1."

Your comments and ideas are always welcome. You can also Tweet me at the Twitter address below.

At the time of publication the author was long shares of AAPL.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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