On September 16, I posted an article titled - Google likely to breach $500 soon. I followed it up with an article titled - Google likely to breach $600 soon, on November 10. On December 22, Google breached the $600 mark to end the day at a high of $601.12, and since then there has been no looking down until yesterday when it closed at $619.4 compared to $622.87 on the day before yesterday. Analysts' consensus 1 year target price is now at $650. So, will the stock breach $650 level soon? Though I am not inclined to believe that the stock will breach $650 level soon, I definitely believe that we can't discount such a possibility altogether.
Why is the stock surging so fast? Is there a conspiracy brewing?
Nearly 80.5% of the outstanding shares in Google are held by institutional holders numbering 1170. Currently, there is a dearth of quality stocks in the large cap segment which can deliver fantastic dividend and price appreciation like that of Google. A look at the sentiment of these institutional players in the Google stock gives the confidence that they are not jacking up the stock price to con the retail investors. As per the latest institutional holdings in Google stock, 534 institutional players have increased their positions, betting bullish on the stock, while 505 institutional players have decreased their positions, betting bearish on the stock. Moreover, the number of players (87) who have taken new position in the stock outnumbers the number of players who have sold-out (62) their positions – meaning the net sentiment is positive on the stock. Another confirmation that the sentiment is genuinely bullish on Google comes from the short interest number. No doubt, the short interest on the stock has seen more number of upticks than downticks in the last few quarters. Yet, the short interest number hasn't shot-off to unusual numbers as in the case of genuine bearish stocks. Currently, the short interest (as of 12/15/2009) is at 1.851062 days compared to 1.852330 days on November 30, 2009. The short interest is definitely not at worrying levels – almost one year back when the stock was trading at $300 levels the short interest was at 1.776773 days. These numbers give me a confidence that the Google stock appreciation is not the result of manipulation but is the result of genuine belief in the company's business potential.
When will the stock breach $650 level?
It could be as soon as the end of January 2010. Right now lot of action around the Google stock options is centered at $650 level. While the highest volume on Jan2010 call is at $620 level, open interest is highest at $650 level. Interestingly, there are significant numbers of players willing to speculate at $700 and $800 levels – of course these are an indication of speculation than a genuine belief in the stock price appreciation possibilities. |
发表于 2009-12-31 17:40
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