Google going, going, gone!

The summer sale has started early! Line up here for shares in Google at $470 each!

Google may have just increased Q1 revenue over 60% year-on-year but Google is available on a 2008 PE of 24, based on a very conservative estimate for 2008 EPS.

By comparison, eBay, growing revenues at 20%, is on a 2008 PE of 22. Yahoo, also growing at 20%, is on a 2008 PE of 38!

Why is Google so cheap? I guess investors assume that growth at 60% is not sustainable. And they are probably right. But if over the next year Google's growth rate settles down to 30% the shares are still cheap.

Psychologically the shares look like they must be expensive at $470. I think a share split could have a material effect on the share price as Google would look so much cheaper at $47.

In 2005 I doubled up on Google before the Q3 results came out and made a very nice return. Should I do the same now? Probably, as I think the downside from here is limited.