Tuesday, January 25, 2011

Google (Nasdaq:GOOG), Apple (Nasdaq:AAPL) Shares Cheap, Lot of Room to Run

It appears tech fatigue may have set in for majors like Google (Nasdaq:GOOG) and Apple (Nasdaq:AAPL), who have been relatively level at a time when the Nasdaq has been rising. It's thought it may be the sheer size of the company that has been holding investors back.

Canaccord noted, "Over the weekend, Barron’s laid out a bull case for both Apple and Google in its “Technology Trader” column. The financial journal notes that many investors are “checking out” of large-cap technology names. Indeed, Apple shares are up just 6% in the last three months, while Google is unchanged, compared with a 9% climb in the NASDAQ during the same period. There is a kind of “fatigue” with blue chip tech companies, explained Barron's, and their “sheer size” may be holding them back. To be sure, companies like Apple and Google are mammoth, and it is understandable why some investors may doubt they can continue to grow at such scale. Yet Barron’s points out that Apple turned in a 70% increase in revenue when it reported fiscal first-quarter results the day after Jobs announced he was taking a break. Similarly, Google reported a 26% increase the day its executive shuffle was announced. Furthermore, Barron’s believes that some investors’ hesitancy may be that the large cash piles both Apple and Google have amassed make it seem as if they lack opportunities. Apple ended last quarter with $60 billion in cash and short- and long-term securities, while Google has $35 billion. Yet Barron’s advised this concern is bonk: both are major players in the booming mobile space, and both are known to be working on other projects. All told, Barron’s thinks Apple and Google have a lot of room to the upside, and described the shares as “exceedingly cheap”.

Google was trading at $617.58, gaining $6.50, or 1.06 percent, as of 1:49 PM EST. Apple was at $339.88, up $2.43, or 0.72 percent.

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