Google Inc.: Shares Might be Expensive but Options are Attractive

It is been quite a while since I’ve talked about investing in the stock options of the big names in technology, not much as a matter of principle but due to the volatile nature of tech stocks. I became fixated about investing in Google Inc. (NASDAQ:GOOGL) today and my money-making mind did not rest until I have done my due diligence on Google options.

A Brief Recap

Google is the giant Mountain View CA, company that is involved online search (think Google search), advertising (think Ad words), operating systems and platforms (think Chrome OS and Android OS), enterprise and hardware products. With a valuation of $409.05B and a share price trading around $605.19 per share (after the split), Google is without doubt a company to reckon with.

Google in Recent News

Google reported its second quarter earnings last week Thursday in which it posted earnings of $5.09 on revenue of $15.96B. The earnings missed the consensus analysts’ estimate by $0.08 while revenue beat the consensus estimate by 2.5%. Nonetheless, earnings showed a 20.3% increase over the year-ago quarter while revenue increased by 21.7% from the same period last year.

Reasons to Stay Bullish

Unparalleled Growth

The company has increased revenue by CAGR of 20.4% over the past five years, gross profit dollars increased by a CAGR of 18.6%, and operating profit dollars increased at a CAGR of 12.7% within the same period. The double-digit growth recorded across Google’s core business shows how management is working hard to keep the company growing despite its current mammoth size and dominance in its industry.

The company’s focus on innovation with the launch of new products and services will also go a long way in ensuring that both users and advertisers continue to benefit in the long term. The company’s strong financial muscles give the company the wherewithal to explore new opportunities that has potential to provide growth.

Leading Search Market Share

It is no longer news that Google dominates the search landscape in the United States with a 67.5% share of the U.S search market as at February 2014. What is more interesting is that Google’s search engine is the leading search engine in Latin America, Canada, most of Asia/Pacific and in Europe. In fact, Google’s search engine controls about 90% of search traffic in U.K, France, Germany and Spain.

Leveraging Android to Drive Sales of Digital Products

The Android ecosystem has gathered impressive momentum to overtake Apple’s iOS over the last couple of years and the growth does not seem to be slowing down. Google’s Android OS is used on about 80% of smartphones in the United States and Google search is the default search engine on most devices that are not running Android. The wide user base for Android has been instrumental in helping Google monetize its mobile segment for mobile ads in order to improve the top and bottom lines.

How to Trade GOOGL Options

Google is one of the tech stocks that are best poised to deliver impressive rewards to investors in the short and long term. However, the trading price above $600 puts the stock out of reach of many traders and hence options provide the best leverage to record profit on the stock. I recommend the GOOGL Jan 2015 650.000 call (GOOGL150117C00650000) at bid of $16.50.

— Daily Option Alerts

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