Can Google Move Higher?

With shares of Google (NASDAQ:GOOG)(NASDAQ:GOOGL) trading around $575, is GOOG an OUTPERFORM, WAIT AND SEE or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Google is a global technology company focused on improving the ways people engage with information. The business is based on the following areas: search, advertising, operating systems and platforms, and enterprise. The company generates revenue primarily by delivering online advertising. Google is a search giant with most of the market share largely because of its execution and delivery. An increasing number of consumers and companies worldwide are coming online, which will surely increase the amount of eyes on the company’s ads and, in turn, advertising revenue. At this rate, look for Google to remain on top of the Internet world.

The European Union’s decision affirming the right to be forgotten has already launched a new business. Forget.me is giving EU residents the ability to find offending links and offering advice on how to word the claim so that Google is more likely to remove them. The currently free service is being offered by French service Reputation VIP, which offers users the ability to clean up their online presence for a fee. Google already has a form available for EU residents, but Forget.me offers help finding links, providing step-by-step advice for the process and the ability to track the claim, making the follow-up a little easier.

T = Technicals on the Stock Chart Are Strong

Google stock has been moving higher over the last couple of months. The stock is currently trending higher and looks poised to continue. Analyzing the price trend and its strength can be done using key simple moving averages. What are the key moving averages? The 50-day (pink), 100-day (blue), and 200-day (yellow) simple moving averages. As seen in the daily price chart below, Google is trading above its rising key averages, which signals neutral to bullish price action in the near-term.

Source: Thinkorswim

Taking a look at the implied volatility (red) and implied volatility skew levels of Google options may help determine if investors are bullish, neutral, or bearish.

What does this mean? This means that investors or traders are buying a very significant amount of call and put options contracts, as compared to the last 30 and 90 trading days.

As of Thursday, there is an average demand from call buyers or sellers and low demand by put buyers or high demand by put sellers, all neutral to bullish over the next two months. To summarize, investors are buying a very significant amount of call and put option contracts and are leaning neutral to bullish over the next two months.

On the next page, let’s take a look at the earnings and revenue growth rates and the conclusion.

E = Earnings Are Mixed Quarter-Over-Quarter

Rising stock prices are often strongly correlated with rising earnings and revenue growth rates. Also, the last four quarterly earnings announcement reactions help gauge investor sentiment on Google’s stock. What do the last four quarterly earnings and revenue growth (Y-O-Y) figures for Google look like and more importantly, how did the markets like these numbers?

Google has seen mixed earnings and increasing revenue figures over the last four quarters. From these numbers, the markets have been pleased with Google’s recent earnings announcements.

P = Average Relative Performance Versus Peers and Sector

How has Google stock done relative to its peers – Yahoo (NASDAQ:YHOO), Microsoft (NASDAQ:MSFT), and Baidu (NASDAQ:BIDU) — and sector?

Google has been an average performer, year-to-date.

Conclusion

Google is an Internet giant that provides valuable search and advertising services to a growing user base worldwide. Forget.me is giving EU residents the ability to find offending links and offering advice on how to word the claim so that Google is more likely to remove them. The stock has been moving higher over the last couple of months and looks poised to continue. Over the last four quarters, earnings have been mixed while revenues have been increasing, which has left investors pleased. Relative to its strong peers and sector, Google has been an average year-to-date performer. WAIT AND SEE what Google does next.

Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

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More From Wall St. Cheat Sheet:

• Google Fit Brings Opportunities in Healthcare, Advertising
• Is Google Being a Glasshole to Its Explorers With This Upgrade?
• Google’s Pichai Likens Android to a ‘Cantankerous Democracy’

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