The Only Tech Stock You'll Ever Need
Companies / Google Jul 09, 2013 - 02:05 PM GMTBy: Money_Morning
Michael A. Robinson writes: When it comes to cutting-edge science that will redefine how we live and work in coming years, there's no shortage of fascinating breakthroughs.
Every week brings dozens of new developments covering everything from bionic eyes to drones the size of humming birds.
Trouble is, very few offer actual opportunities to make money right now, today.
But there is one big-cap juggernaut that provides stock profits to its shareholders while it's busy inventing the tech of the future. And it isn't satisfied pigeon-holed into one specific sector but has its sights set on so many diverse industries (or tech that will affect numerous industries) it's like buying a stock that's an exchange-traded fund (ETF).
Unlike many tech leaders, it isn't sitting on its laurels and market dominance. It's actively looking into cutting-edge sectors to advance its brand. What's more it's product pipeline is blazingly fast and efficient.
We're talking intriguing rollouts in new fields like:
- Augmented human intelligence
- Wearable computers
- Robotic cars
- Machine learning and communication
- Advanced optical networking
In other words, you have to look at this stock like it were a "Future Tech ETF."
The Future Is Now
But enough about what's to come.
In the here and now, the stock is poised to gain roughly 50% by the end of 2015, and that's on the heels of a two-year run of 70% gains.
I'm talking about Google Inc. (Nasdaq:GOOG).
Here's the thing. The founders of Google are nothing if not visionary leaders with solid business chops. They want to move far beyond search results and advertising and Android and tablets and operating systems and social networks to become the company of the future.
In fact, Google already ranks as a leader in one of the hottest -- and most profitable -- tech fields today and one that will dominate the next decade: mobile computing.
Consider that its Android mobile operating system now ranks first, greatly outselling the iPhone from Apple Inc. (Nasdaq:AAPL).
The market research firm Gartner predicts the number of Android devices (mostly smart phones) will roughly double by the end of next year to 1.06 billion. That compares with roughly 506 million sold last year.
This is a high margin business in which Google licenses the software and then sells mobile ads.
No wonder Google is such a cash machine. With a market cap of $292 billion, it generates nearly $11 billion in free cash flow a year.
That's a lot of cash. What's more, it has bold plans for all that cash...
Vision and Capital
Take the way Google intends to bring mobile broadband internet to the developing world in the very near future.
To do so, Google intends to hoist a number of high-altitude helium balloons in remote, unwired stretches of the world, such as in portions of Africa and Asia. It's already begun field tests. The helium balloons contain special devices that beam broadband Web signals picked up by special antennas back on the ground.
Google is exploring how to take similar technology and put it in satellites. That would literally allow it to beam Web signals to every corner of the earth, ensuring even more Android sales.
In the U.S., the Silicon Valley giant is rolling out the next generation of high-speed Internet. Called Google Fiber, the technology relies on fiber optic cables and advanced optical networking gear.
Together they deliver Web speeds of a blazing 1 gigabit per second. That's roughly 100 times faster than what's on the market today.
But Google wants to become more than a high-speed Internet service provider. It sees its fiber initiative, now centered around the Kansas City area, as a portal into living rooms throughout the U.S. The firm is pushing its ability to provide Hi Def TV as part of its Web bundle.
Meantime, the Bay Area where I live is abuzz with stories and rumors about another Google next-gen project -- robotic cars.
These are the perfect autos for the aging of America (and Japan and Europe). In the very near future, people will routinely live to be 100. Of course, they will want to maintain their independence, which puts car ownership front and center.
Robotic cars won't just avoid accidents, they'll also park themselves.
Beyond the cool factor lies a crucial type of tech that will redefine the future. These self-driving autos rely on advanced artificial intelligence.
Make no mistake about it, Google is all about AI, as it's known in tech circles.
Google X
The firm hired renowned futurist Ray Kurzweil last December. Kurzweil is one of the world's foremost AI experts.
Not only that, but he is considered the "father of the singularity," a point in the future in which man and machine become intertwined. The big benefit to people, Kurzweil says, is having their IQs dramatically increased.
At Google, Kurzweil is supposed to play a major role in the commercial world of the immediate future. He's heading up machine learning and speech recognition, areas vital to a world in which billions of machines will connect to each other wirelessly.
The firm has many more cutting-edge projects at work. But they're a secret. They're part of the highly guarded Google X program, basically a "skunk works" for advanced engineering concepts.
Outsiders don't know the exact details. But we do know that Google X is teaming with some of the world's top AI, robotics and machine learning experts.
Beyond The Cool
And then there's the product that's giving Google its biggest buzz...
Google Glass puts the power of a smart phone inside a pair of eyeglasses. They're like "heads up displays" for military pilots but designed for average people. The spectacles take photos and videos, send and receive text messages, surf the Web and display maps in augmented reality.
Now Glass itself may never become a major consumer success. But the tech is something that will have a broad impact on several commercial areas.
Just think of how more efficient doctors and nurses could be if they had computers inside their glasses. Ditto for delivery personnel or for people working in logistics and supply chain management, from ports to remote rail terminals.
Clearly, the company sees these sectors as new sources of profits, an area where Google really shines. It has grown earnings per share over the last three years at 19% a year.
At that rate, it should earn roughly $55.35 a share by the end of 2015. If the stock still trades at roughly 25 times earnings, that would mean a price of $1,383 a share, an increase of more than 50% from the current $881.
Add it all up, and it's obvious Google is a stock that not only gives you the opportunity for investment profits but it's also a great play on the exciting future of all things tech. An ETF wrapped up in a single stock.
Legendary investor George Soros has increased his Google holdings. Check it out.
Source :http://moneymorning.com/2013/07/09/the-only-tech-stock-youll-ever-need/
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