Wednesday, January 23, 2013

Trade 1425 Trading Google and it's Earnings Report


Picked up some Google shares at $704.50 last night, expecting the Earnings report to come in better than expected.

- Using Estimize.com/goog/fq4-2012  I was able to see that the Wallstreet crowd could be underestimating the EPS number.  As of this post, Google did 
indeed beat the Wallstreet estimates.  Interestingly, Estimize got the number exactly right.  There is the wisdom in crowd.

- Price action prior to the stock was also the reason why I took the position - if the price had been moving 5% higher prior to last night's price, then I wouldn't have taken the trade.

- There seemed to be a good support range just below 700, which psychologically as a price point and as a 50MA.

- Many other major companies have been bringing the gravy to the table.  We had a good start to earnings seasons, with big and small companies alike tending to beat the EPS numbers.

- I am currently underweight tech, and wanted to gain exposure.

Quick Fundamentals


Seeing that the majority of google's revenue is search, I see the encouraging growth in mobile search, and the obvious move they made into tablets and nexus phones will continue to add to earnings in 2013.  The margins will continue to be fantastic and should support pe's of above 20.  I also think we see a price of 800 if the current market bullishness continues.