Company Google (Nasdaq: GOOG)
Operations Google is the search-engine market leader, the owner of YouTube, and an increasingly popular deliverer of cloud-computing software.
Recent price $616.79
Market cap $197.3 billion
Trailing P/E Ratio 23.4
Return on Equity, Last 12 Months 20.7%

Source: Capital IQ, a division of Standard & Poor's. Data current as of Jan. 28.

A lot has happened since I recommended Google in September, most of it good. Revenue improved by 26% in the fourth quarter, continuing a trend of mostly accelerating top-line growth. Google's initiatives are catching on at a remarkable rate.

Non-GAAP earnings and cash from operations grew by 29% over the same period, reflecting leverage in the business model no doubt created by the downstream effects of having (ahem) "unprofitable" projects coax more searches -- projects such as the Android mobile operating system, the YouTube video player, and Chrome browser.

With each, Google is grabbing a greater share of our time online and making it easier to connect into more of its services. Consider Android. Users of the OS are more likely to also use Gmail and Google Voice and, in the process, fill the Big G's servers with valuable data for advertising sales.

Android may very well be the company's biggest growth driver over the next several years. Recent research from Nielsen shows that devices based on the OS are attracting more new buyers than competing alternatives from Apple (Nasdaq: AAPL) and Research In Motion (Nasdaq: RIMM).

I've witnessed this phenomenon firsthand. Google didn't show at this month's Consumer Electronics Show, yet the majority of new products announced were based on Android, including what could be a game-changing tablet OS known as "Honeycomb." It's the closest thing I've seen to a legitimate iPad alternative.

For all these reasons and more, the stock is up by 28% since my recommendation, versus just 15% for the S&P 500. Winning from here won't be easy because of increased competition with Apple, Facebook, Microsoft, and Nokia (NYSE: NOK), among others, but new CEO Larry Page expects to bring an even more innovative edge to Google in the coming years. If he's right, outsized profits will follow.

Interested in more info on the stocks mentioned in this story? Add Apple, Google, Microsoft, Nokia, or Research In Motion to your watchlist.

Google and Microsoft are Motley Fool Inside Value picks. Google is also a Motley Fool Rule Breakers recommendation. Apple is a Motley Fool Stock Advisor selection. Motley Fool Options has recommended that subscribers open a diagonal call position in Microsoft. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He owned shares of Apple and Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool owns shares of Google, Microsoft, and Apple, in which it has also written puts. The Fool is also on Twitter as @TheMotleyFool. Its disclosure policy recommends a hot cup of cocoa on a cold day.