Cramer noted Google (GOOG-NASDAQ) on CNBC’s Mad Money tonight as one that has marked time for too long. He thinks the stock is done languishing and it is ready to run. Amazon.com (AMZN-NASDAQ) is the reason that Google is ready to run because of the 60% run. Google is headed to $600.00 on a conservative basis, but he did note a $1,000.00 target briefly and said the $600.00 is the conservative number. By contrast, Google is now the cheapest of all Internet stocks and the metrics make this the case. Amazon.com is more expensive now even though Google has better growth. The contrast is just too great and the point that the street figures Google out you can already be in it. He thinks that Google is valued at half of the relative multiples as Amazon.com. If it was closer it would be a $704.00, but the EBITDA multiples of Amazon would be over $900.00 or over $900.00 and $1,000.00 on forward earnings multiples. BUT….Cramer did at least say it would be irresponsible to be that bullish.
Before you trust this call blindly, keep in mind the relativity of the companies and the size differential before you use Cramer’s contrast and valuation metrics. Google does have a $147 billion market cap and Amazon has a $28 Billion market cap, so one might as just how comparable these really are. AMZN can run up with far less money being thrown into it on basically the same capital allocations and decision process, so keep in mind that there is a size differential here that is pretty massive. GOOG closed up marginally at $474.33, but traded up close to 1% at $477.75 in after-hours on last look.
Jon C. Ogg
May 24, 2007
Jon Ogg can be reached at [email protected]; he does not own securities in the companies he covers.
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