What Is An Appropriate Target on Google?

As long as everyone is throwing out new price targets for GOOG, I'll add my 2 cents. I have been bullish on the stock, as I have posted on this site, and even made it my biggest position as it emerged from its summer swoon.

So is the $600 price target from Citi outlandish? I don't think so. If I were putting out a stretch target, I would use $650. Now before you scoff, lemme do some 'spalinin.

GOOG could easily earn $14.50 next year if earnings momentum remains strong for the company. Also, if growth stocks start to get some multiple expansion (as my colleague Gary D posts), we could easily see GOOG trade at a PEG of 1.5x, or 1.5 times its growth rate.

By my calculations, GOOG currently trades at the lowest forward multiple it has in over 2 years. So let's say we see the multiple expand next year to something like 45x, which is high, but not crazy. Simple math get us to $650 using that methodology.

Now I don't think we get there overnight, but I think it is feasible to see that in 12-18 months. I plan to continue to trade around my core position, as there will be plenty of ups and downs for the stock. But if you're going to put out a stretch target, you might as well make it a true stretch.

Just like Gary "D" thinking his fantasy team will beat mine this weekend.

long GOOG