Google Inc (NASDAQ:GOOG) is doing well by being diverse in their expansion, Robert Peck said in a discussion on CNBC. According to Peck, who is managing director & Internet analyst at SunTrust Robinson Humphrey, people would not have anticipated 10 years ago that Google Inc (NASDAQ:GOOG) would become the largest video player service with YouTube and that it will own the largest mobile operating system, Android. Furthermore, he pointed out that Google has a play in health, driverless cars, wearables with its Google Glass project and more.
“[What] I think is most interesting in this story is you have maybe one of the best business models on the internet with their core search business [that has] all these additional layers of growth on top of it, and you add the optionality of some of those things like driver-less cars, all for a very cheap multiple,” Peck explained.
Peck said that he finds most interesting in Google Inc (NASDAQ:GOOG)’s expansion strategy is its capability in connection to what he calls “multi-screen”. This is, the analyst explained, the ability to advertise to people, whether they are on their smartphones, tablets or computers. He noted that this is the “Holy Grail” for advertisers because it provides a high return on investment. One of the only other companies that has this capability is Facebook Inc (NASDAQ:FB), Peck added.
Near-term growth for Google Inc (NASDAQ:GOOG) will be provided by YouTube and Android, Peck said. However, their long-term growth should be expected from Google Shopping Express, their drone project, and their plays in the $13-billion “Internet of Things” industry with Nest and DropCam.
Even if the profit drivers for Google Inc (NASDAQ:GOOG) are still their core businesses which are search and advertising, Peck believes that the diversified expansion plays of the company will pay off in the long term. Furthermore, what is great about the company’s strategy is that investors are not paying for these expansion bids at the moment, which are essentially add-ons for investors, he said.
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