Google: The Best Cloud Computing Investment

Google Inc. (NASDAQ:GOOG) has to literally be one of the most popular companies in the world.  It is an internet giant, and has become such a common household name that the company’s name is used as a verb (i.e. Just “google” it).  Although Google may fire China over the censorship and cyber attacks, the revenue from China is such a miniscule amount that it will be a blip on the radar.  In fact, it is reported the revenue in China is less than a measly 1% of Google’s total revenue.

J. Royden Ward actually delves into Google and discusses the Cloud Computing element, which is literally the wave of the future, as more and more people demand a mobile lifestyle as opposed to being tied to one workstation.  Ward indicates that Google appears to be the leading developer of cloud computing. Google employees can now store most of their business and personal software and data, such as pictures, videos, presentations and emails, on the Web. This makes software and data equally accessible from home computers, public Internet cafés or smart phones. Google’s cloud computing also makes damage to a hard drive less important.

According to a Wall Street Journal article, Google is expected to launch a service in 2010 that will let users store the contents of entire hard drives online. The company has not confirmed this plan, but Google already enables users to port personal and business data to the Internet and use the company’s Web-based software. Google’s Calendar organizes events, Picasa stores pictures, YouTube (now owned by GOOG) holds videos, Gmail stores emails, and Google Docs stores documents, spreadsheets and presentations.

Ward also discusses some of Google’s financial stats and achievements, identifying that Google's management has aggressively stayed ahead of its competition by expanding and improving the Google search engine and advertising. Founded just 10 years ago, the company’s 2009 sales exceeded $23 billion with profits of more than $6 billion. The balance sheet is very strong with no debt and $24 billion in cash. The company pays no dividend.

Sales increased 9% during the 12 months ended 12/31/09 while earnings per share jumped 19%. We expect sales growth of 14% and EPS growth of 20% in 2010 and in future years. Google will continue to benefit from increasing Internet usage and the effectiveness of online advertising.

The January drop in share price for Google presents an excellent buying opportunity for one of the leading edge technology companies.

Read the rest of Ward’s story here.

Disclosure: No positions in GOOG at the time of writing.