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Doing Detective Work with Google

11/29/2012
By David Urani

You've gotta love the way the internet is constantly changing the game, and that applies to stock market research as well as anything else. Heck, nowadays I've always got my Twitter feed in the background (follow me at @DavidUrani) to help keep up with the action day to day; there are a lot of news wires, hedge fund managers, traders and analysts tweeting some great information out there right at the instant it happens. One other neat tool that's out there right at your fingertips is Google Trends, where you can do some proactive analyst work yourself. Just go to google.com, go to the "more" menu, select even more, and then "Trends."

From there, all you've got to do is type something in and you get a nifty multi-year chart that tracks the amount of search queries for the given phrase over time. The values are based on a scale of 100, with 100 always representing the highest value to date. Sometimes the most important analyst work you can do is to simply find out what consumers are buying, and by tracking their search habits one can get a pretty good idea of how much interest there is in that particular item. Obviously it's not an exact science and some buzzwords work better than others but in many instances you can glean some interesting info.

As we go into holiday season, I've been getting curious as to what's hot this year and what's not, so I've been on a Google Trends binge of sorts. Here are some interesting findings (all charts year 2004 to present):

Urban Outfitters (URBN) is one stock that's had a good year. It was as low as $23 at the start of the year but the Company really seemed to shift into gear in the second quarter. Consequentially the stock does trade at somewhat of a premium now (P/E ratio above 19) so it's key that the company's sales remain hot. So is URBN still a hot destination this Christmas season?

Above is the Google Trend for "urban outfitters." As you can see the latest reading is the highest ever (100), compared to 83 last November. It's looking like once again URBN is turning in a solid year of demand growth (or at least interest in their products), judging by the searches. And the thing is, the Google searches always peak during December shopping season meaning there's even more to come. Last year, the trend rose from 83 to 97 in December.

Another hot retailer this year has been Michael Kors (KORS), who's really been churning out a desirable product line and whose stores have been a top destination. So much so that this has become a real momentum stock with a premium even larger than URBN (P/E is more than 26). Are they keeping pace?

You'd have to say that with a stock as pricey as KORS the Street won't be impressed unless they continue to turn in blowout results. But judging by the Google search history for "kors" (you get a matching chart for "michael kors") I'd say interest in their merchandise is still on fire. Another handy feature that Google added is key news items labeled by the letters. As you can see, point D was the previous peak last December which may have coincided with the holidays, but also the fact that they made their IPO then. Once again, searches will really peak in December.

Here's an interesting result with regards to Activision (ATVI). This is a company that really leans on the success of its annual Call of Duty game launches, which have been the best selling video games on the market for the past several years and account for a large chunk of the company's revenue. Below is the trend for "call of duty" and by the looks of it the mania might have been wearing off for the past couple of years (even though sales have reportedly continued to hit records). The peaks coincide with their November release dates each year. I may be a little worried that the Call of Duty franchise is losing its luster, the decline in searches this year looks pretty sharp (it may have also run into some competition with a new Halo game). Coincidentally, ATVI also got downgraded by Sterne Agee today, not looking too hot in my book.

Here are some others I found interesting:

Did Sturm Ruger's (RGR) gun sales surge again after this election like they did in 2008? By the looks of "ruger" searches they may have (although the stock is already up more than 30% since the election, you may have missed the train by now).

Apple (AAPL) released its new iPad mini last month, but looking at "ipad," it might not have made the same splash as the previous model shown at point B.

Best Buy's (BBY) troubles have been well publicized and "best buy" shows that they may have indeed lost the plot. This year's October low was well below last year's (and 2010's as well) and as of today the November reading stands at 90 versus 98 last year.

And don't get me started on Research in Motion (RIMM). "blackberry" searches don't look like they're ever coming back.

I could keep going (it's endless analyst fun) but you get the idea. Just be wary of which words you choose to get a representative sample.

David Urani
Wall Street Strategies

Charles Payne, Wall Street Strategies CEO, appears every week on FOX News Business shows including Bulls & Bears, Cashin' In, Cavuto and FOX and Friends.

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