Since its IPO debut on August 19, 2004, the shares of Internet advertising firm Google Incorporated (NASDAQ/GOOG) have been one of the hottest stocks. Trading at around $100.00 at its debut, Google has surged fourfold and is trading at over $500.00 a share with an astounding market cap of $160 billion.

The strong online advertising market and the growing acceptance of its advertising model have largely driven Google's success. Advertising has generated tons of cash for this company. Google is a play on online advertising.

The trend for online advertising is clearly positive. The online advertising market is predicted to reach $18.9 billion in 2010 from $9.3 billion at the end of 2004, according to JupiterResearch LLC, a division of Jupitermedia Corporation (NASDAQ/JUPM). The demand for search engine advertising will surpass standard display advertising by 2010 based on revenues.

Google is currently the top stock in its class. Its annual growth is superlative. Its estimated five-year annual earnings growth is 30%, versus 23% for rival Yahoo! Incorporated (NASDAQ/YHOO). Google's current valuation is attractive, versus its peer group.

Google is trading at 26.73x its estimated FY07 EPS of $19.23, versus a more expensive 39.53x for Yahoo! Google's PEG, including the cash part, is 1.11, versus 2.33 for Yahoo!

At this time, Google is the superior Internet play. Yahoo! recently saw the resignation of its CEO after pressure from shareholders to seek a change of direction. We believe it will still be a tough road ahead for Yahoo! albeit there are some rumors of an alliance with eBay Incorporated (NASDAQ/EBAY), which would be interesting.

Momentum stocks like Google do well as long as the company can deliver the extraordinary growth that investors have been accustomed to. Any deviation from this, as in the 2005 Q4, could drive sellers to the exits. But make no doubt about it, Google is a premier Internet play.