Google’s Price/Earnings To Growth ratio makes its current valuation very compelling, says portfolio manager Stan Wong.Google’s current valuation is “very compelling” says one portfolio manager.
Scotia MacLeod’s Stan Wong was on BNN’s “Market Call Tonight” yesterday, and revealed that one of his current top picks is the Mountain View-based search engine giant.
Google, says Wong, is “one of those growth oriented technology names that are very nicely priced in terms of valuation,” noting that the company’s forward P/E is 20x and its long term growth rate is about 18-20%. That PEG ratio, he says, makes Google cheaper than 80% of the S&P 500.
Wong says Google has dominated search, but has expanded its potential upside with 176 acquisitions over the past five years, including the recent pickup of home automation player Nest. He likes the company’s progress in mobile, and thinks it will continue to execute well in that space.
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Wong’s past picks include Walt Disney, which has gained 26%, and Qualcomm, which is up 23% since he recommended it on May 16 of last year.
Since it IPO’d at $85 on August 19, 2004 Google has been one of the top performing stocks in all the S&P 500. The company hit a split-adjusted high of more than $607 in March before a tech sector selloff took the stock down to $516.18 no April 25th. Shares of Google, however, have rebounded strongly since. At press time, the stock was up 1.2% to $571.55.