The Week Ahead: Ed’s Daily Notes for July 21st

Welcome to the new week! Here is what to expect…

For economic reports:

TUESDAY: Consumer Price Index and Existing Home Sales
THURSDAY: New Home Sales
FRIDAY: Durable Goods Orders

Even more important, we are still in the middle of earnings season:

MONDAY: AbbVie (ABBV)
TUESDAY: Apple (AAPL), Microsoft (MSFT), Verizon (VZ), Coca-Cola (KO), Comcast (CMCSA)
WEDNESDAY: AT&T (T), Facebook (FB)
THURSDAY: Amazon (AMZN), Visa (V)
FRIDAY: LyondellBasell Industries (LYB)

One piece of good news from Friday that I overlooked:

Bloomberg (via Yahoo Finance): Google Sales Top Estimates on Robust Ad Demand

Google Inc. (GOOG)’s sales exceeded estimates in the second quarter as the company sold more advertising alongside Web-search results.

Revenue, excluding sales passed on to partners, was $12.7 billion, the company said in a statement yesterday. That topped the average projection of analysts for $12.3 billion, according to data compiled by Bloomberg.

Chief Executive Officer Larry Page is adding new features in mobile, video and Web services to boost user traffic and attract marketers as he seeks to bolster Google’s main ad business. As a result, the number of clicks on ads on YouTube, search and other Google sites increased 33 percent in the latest quarter, making up for a decline in ad prices. Since Google gets paid each time someone clicks on an advertised link, higher volumes result in more revenue.

“They’re the largest player, and they’re gaining share,” said Youssef Squali, an analyst at Cantor Fitzgerald, who rates the stock a buy. “It was a very good quarter.”

…Net income, including from Motorola, which is being sold to Lenovo Group Ltd., rose to $3.42 billion, or $4.99 a share during the second quarter, from $3.23 billion, or $4.77, a year earlier.

…Second-quarter profit excluding certain items was $6.08 a share, compared with the average analyst estimate for $6.24.

In a flat economy, growing revenue is a great sign, even if the earnings disappointed. However, I wouldn’t buy at the current price, even for a long-term hold. $560 would be my target buy price, with the closer it gets to $500 being ideal. I would rate Google as a “hold” at the current price.