The opinions expressed in this commentary are solely those of Paul R. La Monica. Other than Time Warner, the parent of CNNMoney, Abbott Laboratories and AbbVie, La Monica does not own positions in any individual stocks.
Is Google Glass rose-colored? That's clearly the right hue for investors.
Shares of Google (GOOG) are up more than 25% so far this year and the stock hit a new all-time high above $888 Tuesday morning.
So naturally, many investors are not just wondering if Google will soon hit $900. They are fantasizing about a quadruple digit stock price. After all, Google would "only" have to climb another 13% or so to get to $1,000. (Google, you may recall, is planning to eventually split its stock. So it may not have this high of a price in the future. But the proposal is on hold for now due to a shareholder lawsuit about whether the split would give too much control to co-founders Larry Page and Sergey Brin as well as chairman Eric Schmidt.)
It does appear as if Google can do no wrong. The company continues to dominate search and is becoming an increasingly bigger player in other forms of online advertising thanks to YouTube. It's also emerged as the number one mobile platform thanks to its Android operating system.
Toss in work-in-progress products like the virtual reality Google Glass, driverless cars and Google's cable TV/Internet access service Fiber and you can understand why investors are as "super excited" about Google's future as CEO Page.
But has Google's stock run up too far too fast? Even though it seems like Google is invincible right now, weren't investors saying pretty much the same thing about Apple (AAPL) just eight months ago?
In some respects, Google near $900 might be even riskier than Apple was around $700.
The bear case against Google. For one, Google's stock is more expensive. It currently trades at 19 times 2013 earnings estimates. Apple, at its peak, was trading at about 13 times fiscal 2013 earnings estimates.
Google is also a far less diverse (and more economically sensitive) company than Apple. Its revenues are derived almost primarily from advertising. Apple, meanwhile, has more than a quarter of its sales coming from products not named the iPhone or iPad. Yes, investors need to be worried that Apple has lost its mobile edge. But it still sells a decent amount of Macs and software.
Another possible problem for Google? It, just like Apple, may now be over-owned. Earlier this year, Google moved ahead of Apple among the stocks most widely held by hedge funds. AIG (AIG) is actually number one and Google ranked second.
So if there is any bad Google news, say earnings that miss forecasts or evidence that Apple is getting its mojo back when it releases the next iPhone, there are lots of big money managers that could look to take profits. That position could take a long time to unwind.
Nonetheless, it may be a bad idea to bet against Google.
The bull case for Google. It could easily get to $1000 a share sooner rather than later if the news remains this good. Analysts are expecting earnings to increase by about 15% this year and in 2014. Those estimates could be too low.
Google, unlike Apple, really doesn't have serious competition for its key business line. It dwarfs the Microsoft (MSFT)/Yahoo (YHOO) search partnership, as well as AOL (AOL) in search. Some argue that Amazon (AMZN) could give Google a run for its money in product search, but I don't see that happening just yet.
And even on the display (i.e. banners, videos and other non-search ads) side of the business, Facebook (FB) has yet to prove that it can generate revenue and earnings as effectively as Google. Facebook's net profit margin in the first quarter was 15%. Google's was 25%.
Google also has $50 billion in cash. Sure, that's a pittance compared to Apple's $144 billion iMountain. But Google is still growing rapidly enough that investors aren't pressuring the company to use that cash to buy back stock and pay a dividend.
If Google can continue to focus more on long-term growth as opposed to appeasing short-term investors, that's a good thing. And for the time being, Wall Street is happy to trust the decision making of Page, Brin and Schmidt.
While the jury is still out on whether Google's acquisition of Motorola Mobility will be a success, Google has proven itself to be savvy with most of its other purchases. YouTube and ad solutions company DoubleClick have been obvious successes for Google.
Smaller deals for review company Zagat, travel software firm ITA and mobile ad platform AdMob have also helped the company expand into new areas. And then there's Android. Google bought it in 2005. Terms were never officially disclosed but many tech trade publications have reported that the price tag was just $50 million.
And perhaps the best thing Google has going for it is that this is not a company that is resting on its laurels. Earlier this year, it made a notable move in its executive ranks, shifting former Android head Andy Rubin to another role. Rubin was replaced by Sundar Pichai, who also runs Chrome and Google Apps. This has prompted speculation that Google may look to merge Chrome and Android into one operating system.
It would be easy for Google to just look at its ever rising stock price and proclaim that there's no room for improvement, no need to shake things up. But Google doesn't operate that way.
So while I realize that predictions of a shiny round number for a high profile stock smacks of gimmickry and can cynically be viewed as a sign of a market top, Google realistically could hit $1,000 and still be considered a decent bargain.
Apple sold $17 billion worth of bonds late Tuesday in the largest sale of corporate bonds ever.
The company offered both fixed and floating rate bonds, with maturities of of 3, 7, 10 and 30 years.
At $17 billion, the offering trumps Roche Holdings' $16.5 billion bond sale in 2009, according to data from Dealogic.
Apple saw strong demand for its bonds, which were rated Aa1 by Moody's and AA+ by Standard & MOREBen Rooney - Apr 30, 2013 11:24 AM ET
Instead of using its own cash hoard to reward shareholders, Apple plans to go into debt for the first time ever.
Apple CEO Tim Cook said late Tuesday that the company will double the amount it returns to shareholders through share buybacks and dividends by 2015, but will "access the debt market" to pay for it.
Borrowing money seems odd for a company like Apple (AAPL), which has $144 billion in cash. But more than MOREHibah Yousuf - Apr 24, 2013 2:47 PM ET
This article was published in the May issue of Money magazine.
You don't need Siri to tell you that mobile technology is just getting started.
Shipments of smartphones are forecast to surge 65% and tablets are expected to nearly double by 2017, led by strong growth in China, India, and Brazil, according to research firm IDC. Meanwhile, rumors abound of bendable screens and eye-scrolling technology just around the corner.
So what's the best MOREPaul R. La Monica - Apr 23, 2013 9:45 AM ET
When 21-year old Tom Pszeniczny decided to make his foray into investing, he figured Apple was a pretty safe bet.
In the days leading up to the iPhone 5 launch event last September, the Drexel University student bought six shares of the iPad and iPhone maker for $665 a piece.
While Pszeniczny wasn't looking to make a quick buck, the following week seemed promising. On the day the iPhone 5 went on sale, MOREHibah Yousuf - Apr 22, 2013 8:03 AM ET
Move over Bitcoins and gold, Apple (AAPL) is the latest investment to succumb to panic selling.
Shares of Apple plunged as much as 6% Wednesday afternoon and hit a new 52-week low of $398.11 in the process. Shares recovered a bit as the day wore on and closed just under the $403 mark. But Apple's stock is now down almost 25% this year and is more than 40% below the all-time MOREPaul R. La Monica - Apr 17, 2013 4:32 PM ET
Who doesn't want to be a billionaire? A new app, aptly named iBillionaire, won't turn you into one. But it makes it easier for you to invest like one.
iBillionaire, which launched Wednesday, tracks what Warren Buffett, Carl Icahn, Bill Ackman and other financial titans are buying and selling.
Using SEC filings, the data are fed automatically into the app, though the iBillionaire team has a data analyst on staff MORECatherine Tymkiw - Apr 10, 2013 11:23 AM ET
Apple may not be the darling of every investor's eye but Google is starting to lose some love too.
Just a month ago, shares of Google were well on their way to $900, with some analysts even calling for Google's stock to hit $1,000.
Even though shares are still up 9% for the year, they're moving further and further away from their March 6 all-time high of $844.
What helped propel Google (GOOG) MORECatherine Tymkiw - Apr 8, 2013 1:10 PM ET
The second quarter is looking a lot like the first quarter for two smartphone makers who share their corporate monikers with the name of a fruit.
Apple (AAPL) fell nearly 2% Monday. The iEverything maker's shares were down 16% in the first three months of the year, making them one of the worst performers in the S&P 500.
Meanwhile, BlackBerry (BBRY) was up more than 5% Monday. The stock gained more than MOREPaul R. La Monica - Apr 1, 2013 12:38 PM ET
How's this for a House of Cards? Netflix (NFLX) is the best-performing stock in the S&P 500 so far this year. Shares have more than doubled as investors have once again become optimistic about the company's growth prospects.
Netflix rose nearly 5% Tuesday after Pacific Crest analyst Andy Hargreaves boosted his price target on the stock to $225. That's up from his earlier forecast of $160 and is nearly 20% higher MOREPaul R. La Monica - Mar 26, 2013 12:22 PM ET
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