Google: To Buy, or Not to Buy?

Larry Page and Sergey Brin, co-founders of Google (Nasdaq: GOOG  ) , are in a Fool fight. And the brawl is getting bigger with each passing click.

I'm referring, of course, to Motley Fool CAPS, our new service that ranks players by their ability to predict the price movements of the stocks they follow versus the performance of the S&P 500. Of the 700-plus CAPS players making a call on Google, there's no decisive majority in favor of the bullish or bearish view.

Searching for returns
While I've remained on the sidelines in this free-for-all, many of my colleagues haven't. Take bargain hunter Chuck Saletta, for example. He has the highest-recommended Google "pitch" -- a short investing thesis exposed for all to see -- among the bears. Allow me to share:

Okay -- seriously. The company is priced to perfection on a mythical presumption of growth 4-5 years from now that may never materialize. It'd be worth looking at around one-half of its current price. And perhaps at one-quarter of its current price it might be considered in value territory. Thanks to the huge hype potential and the old saying "the market can stay irrational longer than you can stay solvent," I'm not shorting this company in real life. But in CAPS, I'll take a shot at underperform.

How has Chuck fared? His pick is up slightly as Google has lagged the broader market since June, when he first posted that thesis.

Foolish colleague Jim Gillies hasn't done as well; he's down 2.75 points since he placed his underperform rating in May. But his reasoning for shorting shares of the search king has won wide applause in the digital halls of CAPS:

Every tech fund owns Google. It has been added to S&P 500. And it sports a sky-high valuation. Who's left to love it?

Plenty of Fools, apparently: 361 of the 714 to rate Google so far say outperform. You won't believe who's leading the list.

Adding up the ads
Small-cap value hunter and Motley Fool Hidden Gems co-advisor Tom Gardner (!) leads those playing Professor Positive for Google. His reasoning? See for yourself:

After the upgrade on Google this morning (9/13), I think the market will rally behind this stock over the next couple of months. The stock has been stuck between $375-$425 for some time. In the end, I think the only thing stopping Google will be the Justice Department, and I don't expect hints of that issue to surface for a few years. For now, I'm just making a short-term call on the shares. We're headed to $450.

Beware the apocalypse when a value hound gets behind short-term growth, Fool. Or maybe Tom's thesis isn't that far-fetched? Here's what CAPS player Macrodata had to say:

With its lofty valuation, Google is overpriced at present. But this is one train you want to be on when it leaves the station. The Internet is still young, and Google is at its center. [This is] an innovative company, so be patient. Meanwhile, enjoy the satisfaction of beating up on Microsoft (Nasdaq: MSFT  ) .

Maybe over the short term, but more than a thousand Fools are bullish on Microsoft over the long haul. Several insist that Google won't be able to keep sticking it to Mr. Softy, including CAPS player Tarantula:

... Realize that many corporations in this country and abroad haven't upgraded to Windows XP yet, so it doesn't really matter when Vista launches. Most corporations wait until all the security bugs are shaken out before upgrading their enterprise. How many Fortune 1000 companies are running open source solutions on their desktop? How many of them are going to let Google or some other company host all of their sensitive data for them outside of their firewalls?

Motley Fool Inside Value advisor Philip Durell agrees. That's why he's profitably added Microsoft to the Inside Value portfolio three times over the past year. Naturally, he also rates Mr. Softy as a three-year outperform in CAPS.

Earn your Fool cap!
So, who's right when it comes to Google? Chuck? Tom? Philip? You?Get in the game now, and tell us what you think. Or, if Google doesn't strike your fancy, remember that 1,200 stocks have yet to earn a star rating in CAPS, including publisher Dow Jones (NYSE: DJ  ) , trailer maker Wabash National (NYSE: WNC  ) , mental-health-care provider Providence Service (Nasdaq: PRSC  ) , and integrated-circuit manufacturer Zoran (Nasdaq: ZRAN  ) . You can rate any of them right now. Your Fool cap is waiting.

Microsoft is a three-time Motley Fool Inside Value selection. Ask us for an all-access pass to the service, and you'll be privy to chief advisor Philip Durell's best picks, which collectively are beating the market by more than 5 percentage points as of this writing. You'll also receive instructive lessons on valuation and company analysis. Give Inside Value a try; it's free for 30 days.

Fool contributor Tim Beyers has 33 picks in his CAPS portfolio, including NVE (Nasdaq: NVEC  ) , which he believes is a wonderful short candidate. Think he's wrong? Get in the game and add your own rating.

Tim didn't own shares of any of the companies mentioned in this story at the time of publication. Get the skinny on all of Tim's stock holdings by checking his Fool profile. The Motley Fool's disclosure policy always beats the average.


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