Google (GOOG) is a steal at these prices

Filed under: Google (GOOG), Microsoft (MSFT), Yahoo! (YHOO), Bargain stocks, Stocks to Buy

In the early part of this decade, I was the president and CEO of a very successful asset management firm. As one of the few firms focused on value investing, we had a field day finding stocks to buy in the collapse of the dot com boom.

Today, we face a collapse of a different sort, and it is leaving a landscape littered with value.

One of my former analysts said to me the other day that an investor could do very well buying 100 cheap, blue chip quality stocks that can be expected to do well as the economy bottoms and ultimately recovers.

He's right. The huge number of deals allows for a great degree of selectivity. A value investor today can buy the best of the best in a diversified portfolio that will mitigate risk. It does not eliminate risk, but the strategy seems quite rational to me.

One of the best-of-the-best names that I think should be a core holding in any portfolio is Google (NASDAQ: GOOG). This technology behemoth dominates the search space and is expanding its reach to Internet navigation and software. It is taking the fight directly to Microsoft (NASDAQ: MSFT) and it appears to be making headway. MSFT has been trying desperately to catch up with moves, including the failed takeover attempt of Yahoo! (NASDAQ: YHOO).

On Tuesday, MSFT seemed to indicate that it was no longer interested in buying YHOO. That is a major mistake that greatly benefits GOOG. A deal in search only would be a complete and utter mess. MSFT had been willing to pay $33 per share for the entire company a few short months ago. Now it's not interested. Such a statement shows hubris and ego at Microsoft. MSFT should be focusing on how to compete with GOOG, and while the attention is on search at the moment, the bigger issue is navigation and software. That's why buying all of Yahoo makes the most sense to me -- buying search does not guarantee success. The managerial distraction is allowing GOOG to operate in the shadows, slowly but surely building more power.

Continue reading Google (GOOG) is a steal at these prices

Google (GOOG) is a steal at these prices originally appeared on BloggingStocks on Thu, 20 Nov 2008 19:00:00 EST. Please see our terms for use of feeds.

Permalink | Email this | Comments