-- Buying 40 shares of Google.

We will initiate a new position with 40 shares of Google (GOOG), which have a bid/ask of $1,060.84/1,062.00.

GOOG is a leading global technology company that we believe is in the sweet spot of the Internet, with a focus on mobile, video, consumer and online search advertising. The secular growth in online advertising is key to our thesis in owning the shares and Google's valuation is one the cheapest ways to play this theme.

The stock has lagged its peers year to date and having sold a substantial part of our Facebook (FB) position, we will use those profits to add GOOG. GOOG is cheaper than FB and is positioned well to continue to drive double-digit earnings and revenue growth at an attractive valuation.

We will also add to our Apple (AAPL) position when our restrictions are cleared. This looks now to be Monday.

Online advertising is growing at double-digit rates fueled by display advertising, the growth in mobile and mid-teens growth in international markets. Google manages one of the leading Internet search engines that generates revenue whenever users click on to view advertisements related to their searches. This is 87% of the company's total revenue base, broken down into Google Web Sites at 62% of overall sales and Google Network Web Sites at 25% of overall sales. It has a roughly 40% share of U.S. online advertising revenue and more than 60% of all global Internet searches are conducted using Google, more than 5x the level of its next competitor. It is this dominance that is so attractive from a business point of view, as advertisers have to use Google because of its reach and customer knowledge.

With products like Android, DoubleClick and Chrome, the company has significant resources to learn about the consumer and how to target advertising to him/her, so we expect the dominance in search and online advertising to continue and for the company to deliver above-industry growth rates for the next several years. The remaining sales are generated from advertising that Google places on other companies' websites, as well as hosted enterprise products like e-mail and office productivity products. Its Motorola segment accounts for 8% of sales and licensing agreements are roughly 5% of sales. The company has a diversified geographic footprint, with 47% of sales coming from the U.S., 10% from the U.K. and the rest internationally.

The company's balance sheet is robust, with only $5.2 billion in debt and $56.5 billion in cash. This equates to $167 in cash per share and leaves the company ample flexibility to do accretive tuck-in acquisitions and invest in future growth.

Third-quarter results released in mid-October were impressive and marked the first consensus revenue beat in eight quarters. The highlights of the quarter included strength in the Google Web Sites segment, international, YouTube and gross profit. Growth was impressive for a company of this size. Sales through Google Web Sites accelerated to 23% year-over-year growth from 20% in the second quarter, international sales grew 32% year over year and also accelerated from the 28% growth seen last quarter, and gross profit increased 18% year over year after posting 14% growth in the second quarter -- this was clearly the highlight in the report. Also YouTube continued to post solid growth with cost per gigabyte (CPG) growth of 75% year over year.

Although the 8% year-over-year decrease in third-quarter CPC was worse than expected, management noted there were many moving parts including FX, mix and policy changes -- and as these internal changes get cycled through we expect CPC to improve -- which will drive the share price higher. Offsetting the CPC decline, paid clicks increased 26% year over year and are a strong indication of growing demand which, again, gives us confidence in the turn in CPC growth.

Going forward, we expect the company to post earnings growth in the high teens with sales growth in the mid-teens driven by mid-teen growth in advertising and Motorola, while licensing growth should move significantly higher. Among the Internet tech plays, the company has one of the most attractive valuations and is one of the few which trades at a discount to its historical averages. Currently, the shares are trading at 20.3x 2014 earnings, well below both its 10-year average of 24.5x and the current group multiple of 30.0x 2014 earnings. The shares have also lagged the group by 5% year to date and we believe it will eclipse this gap as we head into 2014 as it leverages its leading advertising position and integrates the growing mobile efforts.

Our target is $1,135.

After the trade, we will own 40 shares of GOOG, or 1.3%.

Regards, Jim Cramer, Stephanie Link, and TheStreet Research Team DISCLOSURE: At the time of publication, Action Alerts PLUS was long GOOG.