Which stocks are looking fine in ’09? Discover all our Foolish ideas for The Best Stocks for 2009.

The Great Panic of 2008 has created a uniquely delicious market. Wall Street looks like a battlefield where wounded warriors limp around the bodies of the fallen. There are a plethora of great values on these blood-soaked streets. There's also a lot of risk, as we still have to figure out which great businesses are stumbling to their demise, and which ones can shrug off a few flesh wounds.

Weighing risks against opportunity, then, I can't think of a single stock that looks as promising as Google (NASDAQ:GOOG) right now. So will 2009 be the year Big G roars back to a sane stock price?

Wait, what? Sane?
Yeah, you heard me. When Google's share price was soaring past the $700 mark with a price-to-earnings ratio (P/E) in the 60s, that made sense to me. It still does. If the company was built on empty virtual calories alone, I could understand why the Street would take its stock back down below $300 again. But that is simply not the case. Mr. Market -- and, by extension, most investors -- simply don't understand exactly how big Google's plans are, so they tend to overreact when the online advertising market takes a hit. But buying Google at just 19 times trailing earnings is a dream come true.

So let's set the record straight.

The bad rap
Right now, it's easy to dismiss Google as a latecomer to the dot-com collapse that had a massive implosion coming all along. Yahoo! (NASDAQ:YHOO) is on life support, mighty Microsoft (NASDAQ:MSFT) can't make a buck in the online market to save its life, and if advertising is the lifeblood of Google's market, then the retail sector's expected disastrous holiday season must be very bad news for this company.

Sure, Google is far-and-away the leader in online search and online marketing. But if ad space is commanding less demand these days, then there's no way this poor loser could rub two pennies together in 2009. Right?

How to beat it
Before getting to the really serious points, let me just note that online advertising is proving its worth to big ad spenders. TV spots may reach a wider audience, but it's a scattershot approach that throws out a bunch of chicken feed and hopes for the occasional peck from a blind hen. Google's AdWords program is a much more targeted marketing tool, sort of like asking the chickens what they like and then hand-feeding them tasty messages individually.

The return on the marketer's dollar invested online can blow traditional marketing media out of the water -- which sounds great when everybody needs to make the most of their advertising budgets. It takes a bit of effort, though. Coca-Cola (NYSE:KO) could still do a better job driving online traffic and sales, for example. Type "Coke" or "Coca Cola" into the Google search engine and the ad spots are filled by the soft drink maker's online properties. But neither Coke nor Pepsi (NYSE:PEP) shows up alongside my search results for "soft drink," "soda," or "pop." Room for improvement, and a good place for a bidding war that would help Google's revenue.

But like I said, the not-so-old search advertising market is not even Google's best strategy at the moment. No, the Mountain View boys and girls are looking to marry the efficient delivery of AdWords with the mass-market reach of television ads. Google's marketing tools can apply to pretty much any medium you care to mention.

The long-term vision
Now, the full-on Master of the Advertising Universe plan will take a few more years to sprout sweet-smelling flowers and then bear fruit. Currently, the Hallmark Channel, Bloomberg Television, General Electric's (NYSE:GE) NBC family of TV networks, and 96 networks through Dish Network (NASDAQ:DISH) are the only partners signed to Google's advertising platform.

Since you need a digital set-top box to send marketing data back and forth, the choice of future partners may look a little bit limited at the moment. But then you're forgetting about the all-digital broadcasting switch that will happen in a couple of months. Hello, new partners! And hello, freshly addressable customers! Let's make some beautiful and profitable music together!

The 2009 promise
Even if online advertising falls in response to economic weakness in the near term, I am convinced that online marketing will take a bigger slice of America's overall advertising pie. This should help the market again understand where Google is going, and how big it'll be when it gets there. Since investors pay for the future cash flows of their companies, that revelation should be good for a generous helping of market cap.  

Will Google give you the absolutely greatest returns of 2009? Maybe not. But I think investors will see market-stomping performance from it. Plus, I see little downside potential left on the stock as it seems as if any bad news you can dream up has already been priced into this stock.

So mosey on over to Google's Motley Fool CAPS page and tell the world that this stock will indeed beat the market. Add your own thoughts on this digital powerhouse while you're at it. You'll make everyone a little bit smarter -- and richer.

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