Google’s Surge Would Make Casey Kasem Proud

Congratulations to all of those analysts who put a $700 price target on Google (even those who did so in the last six days or whatever). It’s been reached, just 16 trading days after crossing $600 — and with that milestone the company yesterday moved into the top five in terms of market capitalization for U.S. stocks.

That’s right — the top five. The Internet giant now sits among the likes of monsters such as Bank of America, Procter & Gamble and AT&T, as it sports a price-to-earnings ratio of 55 and as analysts continue to raise their price targets on the stock without anyone batting an eyelash. After all, the stock has managed to gain 67% since the beginning of 2006, and has grown over $187 billion in market capitalization in its three years as a public company.

“You think this Internet thingy is going to catch on?” asks Barry Ritholtz of Ritholtz Capital Partners, obviously facetiously. Mr. Ritholtz recalls a brief decision to short the stock when it neared $200 a share, which he says was “the tightest stop-loss I’ve ever worked with in my entire life.” Once shares passed $205, he was long the stock again (although he doesn’t own shares now).

It’s not easy to question the company’s results, which have generally been very strong. Analyst sentiment remains high — all but five of 38 hold “buy” ratings on the shares, according to Thomson Financial. But it’s hard to avoid recalling similar days of market-cap discussions where the subject was Cisco Systems or Amazon.com, or even Oracle, all of which flirted with being The Man, so to speak, before time took its toll.

One thing that’s striking about the top 10 companies in market cap is that they’re all synonymous with one thing. There’s no mystery to their businesses — AT&T is colloquially called “Telephone;” Microsoft is software, Exxon is oil, Berkshire Hathaway is, well, money. Lots of money. So if Google is the Internet, perhaps it will stay in this grouping.

Google might have to remain satisfied with its fifth-place standing for a while. AT&T, at $252 billion, is next, and shares of Google would need to rise to more than $800 to pass the phone company. Of course, this could happen next week.

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