Regular readers of this blog know that I have not been bullish on Google (GOOG). It's not that I don't like the business. I think it's a great company. It's just that I also think the stock is overvalued.
One valuable lesson I have learned over the years is that overvalued stocks can get a whole lot more overvalued before coming back to earth. Google certainly isn't in the same boat as some of those Internet stocks back in the 1990s that reached unrealistic valuations despite having no earnings. Google makes good money. But is it really worth 15 times sales and 45 times projected earnings?
Amazon.com might provide a basis for comparison. At its peak, the stock was selling for 30 times sales. Today it sells for only 1.5 times sales.
I love Google the company, but I'm still avoiding Google the stock.
