Google vs. Apple: Google

In the competitive spirit of college basketball's annual championship tournament, The Motley Fool brings you Stock Madness 2007! Our writers are making head-to-head arguments for their chosen stocks (but not necessarily investment recommendations -- this is, after all, a game), and you'll pick the winners with your article recommendations and Motley Fool CAPS ratings. Who will win the right to cut down the net? Let's tip things off and find out!

How twisted is it to have Google (NASDAQ:GOOG) and Apple (NASDAQ:AAPL) meet in the first round? These brackets are a racket! I'm seething over the seeds. I mean, Apple and Google are pretty much the class of the growth-stock universe. Both companies are growing quickly, and each sports a drop-dead gorgeous balance sheet with more than $10 billion in greenbacks.

I'm here to talk about Google, but when you're admiring two fetching vixens, it's probably best to stack them up side by side before choosing your dream date.

Even though you probably wouldn't go wrong with either of these beauties, how can you not choose Google if pressed to select the greatest market-thumper? Last year, it grew sales and earnings nearly twice as fast as Apple. Its margins were nearly three times healthier. However, if you look ahead to next year, the analysts' estimated earnings multiples are nearly identical.

Google's got it going on, my friend. It's got the octane. The operating efficiency. The total package.

What can hold Google back? Yahoo!'s (NASDAQ:YHOO) attempt to follow in Google's footsteps with its performance-based ad-bidding makeover? Microsoft (NASDAQ:MSFT) dusting off its Live.com search engine? IAC/InterActiveCorp's (NASDAQ:IACI) breathing new life into a post-Jeeves Ask.com? Lawsuits bumping up against Google's recently acquired YouTube video-sharing site?

Let the hiccups come. Underestimate Google's tenacity, and you can join the poor saps who felt that Google was overpriced when it went public at $85 a share three summers ago.

Google's advantage is too great. Yahoo! may have pioneered contextual marketing when it acquired Overture, but Google perfected the platform with its AdWords product. Then it turned around and plastered its brand all over the Web with its publisher-empowering AdSense product.

Why is Yahoo! having such a hard time with its paid-search product, and why is YPN -- the company's feeble attempt to clone AdSense -- so lacking in visibility? It's the network effect. Sponsors know that Google is the place to be if they want to be seen. Thanks to a crafty system that lets advertisers generate perfectly targeted leads for as little as a penny apiece, AdSense is the marketing channel of choice for even the smallest local merchant.

It doesn't end there, of course. That hefty Rolodex of Google devotees can make cash for the search king in so many other ways. You can see some of those avenues in Google's recent moves to make a splash in radio, print, and mobile advertising.

Google's future should be even brighter. By commanding more than half of the searches performed in this country, it wins an audience that marketers covet -- but those marketers actually hold the key to a healthier and wealthier Google.

Ever since its 2005 StarOffice deal with Sun Microsystems, Google has been bitten by the software bug. It's now coming into its own with Web-based enterprise solutions. Empowering companies with high-margin offerings, even as it empowers consumers with the only search engine that matters? I'm sorry, Apple. You're cool and all, but Google is where the real money is at.

Does Google deserve to move on to the next round? If so, head to Motley Fool CAPS and rank the stock "outperform." If you want to rain on my parade, vote it "underperform." Later this week, we'll tally your votes to determine which stocks will advance one step closer to the title.

Read our opposing article on Apple, or see all the entries in the tournament.

Think you could pitch your favorite stock -- or ditch your least favorite -- in 27 seconds or less? That's what we're doing over at Motley Fool CAPS. Check out our new stock videos.

Longtime Fool contributor Rick Munarriz is a huge fan of Google; it would be his homepage if Fool.com weren't occupying that spot. He does not own shares in any of the companies in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. Yahoo! is an active recommendation in the Stock Advisor newsletter service. Microsoft is an Inside Value pick. The Fool has a disclosure policy.