INVESTING: Investors beware as Google becomes Web euphemism

Go ahead and Google it. In what has to be the shortest amount of time in history, a brand name has become the generic. Kleenex has nothing on this company.

Google Inc. is an amazingly successful Internet firm in a time when few other Internet companies are making a lot of headway. The stock is trading for $271 a share today; it went to market last August at $100. The product line has expanded beyond the most wicked search engine on the planet to include e-mail and photography services. Everyone is Googling, and Wall Street loves it.

This is exactly where we run into the problem. The stock has been smoking and it probably has more upside left, but the gains are going to be a lot more stingy. And we might even be within a few months of a massive top in this stock, which simply is too popular.

There are now 18 analysts covering the stock, which is a large number for a new public company, and 16 are at buy or strong buy. None recommend investors sell their shares. There have been analyst upgrades almost every day for the last two weeks. Self-proclaimed gurus are shouting on television that Google is a can’t-miss investment. Once again, Wall Street is doing its best to get you to look left when you should be looking right.

Google is a hated word among day traders because many of them shorted the stock early this year when they saw that millions of additional shares were being released to the public in February. Turns out that Google handled the additional supply just fine, as the stock blasted off to a new high in late April and it hasn’t looked back since.

The short-sales ratio on Google demonstrates a lack of excitement from the short sellers. The number of shares shorted has declined from 14 million in February to 9 million last week. These traders have been burned, and now that extra buying power is not as readily available to give the stock a boost.

There is some unexplained instinct in me telling me the stock will probably hit $300 a share before the turn happens. This may even take a few months. But in a year, Google should be at lower prices.

Google stock is getting very close to being loaded with danger. I get the same feeling about it that I had about Apple Corp. a few months ago. The competition is coming around to the Ipod secret sauce, and pretty soon you will start to see a lot of competition for Google as well. I think the company is going to handle the increasing challenges just fine. The stock over the next few years, however, is a different story. Be careful with this one.