Google: All Wrong

This is probably going to be the only post you can find on the web telling you to sell Google. That’s right SELL Google. It isn’t because I think Google is a bad company, or that they won’t grow over the next few years but they’ve become so over valued that you shouldn’t possibly think about buying the stock.

Growth and Value: When you talk about growth stocks there’s a rule of thumb to use when looking at the P/E ratio of a company it should never be higher than double the growth rate. For example, if a company is growing at 30% per year you should never pay more than 60 times their earnings, or a P/E of 60. If a company’s growth is slowing like Google you should pay less. Google great around 100% last year and is growing around 40% this year. I wouldn’t pay more than a 40 P/E ratio right now for Google which would mean the stock would have to drop to around $500 p