Picksbypikes: Google vs. Yahoo!

I'm going to start today what will hopefully be a weekly post titled Picksbypikes. The point of my weekly article won't be to gloat or tell you how wonderful I am at sports handicapping (I do that enough on my weekly NCAA capping post...4-1 last week thank you), but to talk about random things that I have experienced in my lifetime. The topics could range from hobbies (stocks, sports, or gambling), experiences through life (switching jobs, getting engaged, etc.), or I might even give you secrets on how to bag a fatty on a drunken college road trip (I've been there more than I'd like to admit). So in the future, please feel free to send me a suggestion or email on any topic you would like me to discuss. I would love to hear from all of you. Because as you know, at SixTalkingHeads we've got a lot to say...even though only some of it makes sense.

Now on to the first installment of Picksbypikes.

Picksbypikes: Google versus Yahoo!

Wow, is Google's stock on a tear or what? Not only is Google (stock symbol: GOOG for the non-stock enthusiast) on fire, its counterpart Yahoo! (symbol: YHOO) continues to dissapoint, down 33% over the last 52 weeks. I may not be a "stock guru" like everyone's favorite loud mouth Jim Cramer, but if you knew a little bit about me personally, you would see that my credentials are at least somewhat up to par.

To the semi-genius who purchased Google at $110 around 2 years ago...I salute you. I definitely did not see it coming. Truth be told, I don't even use Google, which is why I probably thought the stock would turn out like most Initial Public Offerings (IPO's)...swimming for dear life in the crapper. Not only did I think the stock was overvalued at $300 a share, I told my aunt to "sell, sell, sell" as soon as it hit $400 a share. That said, even though I was wrong in the past, I need you to swap out of Google RIGHT NOW and pound the table with Yahoo! !!!

Google stock is trading close to its 52 week high of $513 per share. That's extremely impressive considering if you bought in at $110 you are up a whopping 366% since purchase. Who wouldn't want to keep riding Google to the moon? I mean the stock is on pace to hit $1,000 in the next 3 years! Please. Berkshire Hathaway Class A (symbol BRK-A) might be $106,300 a share, but Google is no Berkshire Hathaway. You are probably wondering, "How could a company I've never heard of be worth $106,300 a share?" Better yet, "How can a company I use everyday be worth only $485 a share?" You also may be wondering why a stupid guy who calls himself Pikes is telling you that Google won't see $1,000 anytime soon when this random "Berkshire Hathaway" company is worth 200 times that. Guess what...there's more. You're going to think I'm crazy, but I'll come right out and say it...$513/share Google is actually worth almost as much as $106,300/share Berkshire Hathaway. How can this be you ask? It's called Market Capitalization...

Market Capitalization is calculated by taking the outstanding shares that a company has, then multiplying that number by the current share price. For example, with Google you would take 306.16 million shares times $485 to get a market cap of $148 Billion. Berkshire Hathaway checks in at $163 Billion since it only has 1.54 million shares outstanding. So if you honestly think that Google could go to $1,000 a share, you are looking at a market cap of about $300 billion!!! In comparison, GE has a marketcap of $365 Billion and Exxon Mobil has a market cap of $422 billion. Can Google, a company that has been in existence for a little more than 5 years, surpass the two largest companies in the world that took decades to build? I don't think so. This brings me again to the main point of my article, GET OUT OF GOOGLE and come with me to Yahoo! !!!

When everyone is in love with a stock, it's time to say goodbye. I know it's tough, I fall in love with stocks like my buddy falls in love with girls...frequently, and way too often. But if you want to make money in this market, you have to know when to hold 'em and when to fold 'em. And if you have made money on this puppy, you had better be putting in your sell order as we speak!

In comparison to Google, Yahoo! is cheaper than the girl from the last bachelor party I attended. Yahoo! has a market cap of 37.4 Billion dollars, a mere 25% of Google's value. Now for an important question...is Google getting 4 times as many searches as Yahoo! is? Fortunately for Yahoo! investors, the answer to that question is a flat out NO. Google isn't going to $1,000 anytime soon, but if this market does continue to take off, ask yourself this important question. Who is going to perform better - the small guy at 25% of the value of Google or the big guy that everyone has their money on? I won't go into too many details, but Yahoo! isn't even close to its 52 week high. This is a good thing, because it means there is room for growth. Yahoo! also checks in with a lower Price to Earnings ratio than Google and a decent amount of cash in the bag. Throw in a comprehensive finance section and a killer Fantasy Football server, and Yahoo! is clearly the better play at this time. Just like in gambling, with stocks you want to play against the public when a stock gets too hot. Can you say the 2000-2003 Tech boom? For you Jim Cramer lovers out there, I too can give you 1 out of 5 stock picks and only pound the table on the winners. Remember, just like a bad gambler, most people only talk about the times they win.

It's now time for everyone to say, "YAHOOOOOOOO!"

Disclaimer: Please note that the opinions expressed above are based on the writer's opinion only and should not be used as a sole recommendation to buy or sell any stock. At the time of publication the writer known as Picksbypikes was neither short or long Yahoo or Google.