With all the hype surrounding Facebook, you may have missed one of the most fascinating -- and potentially lucrative -- developments in Internet investing in years.

Google (GOOG), the grandmaster of Internet search and advertising, has fallen so far that it's now considered a value stock by many investing pros.

Google, which still regularly produces 25% revenue growth despite its size, is now a value stock? And, at more than $600 a share, it's underpriced and perhaps even a bargain?

Absolutely, and I'll walk you through the numbers that prove it in a moment, then explain why Google looks so tempting at today's prices. But let's stay with the big picture for a second.

These two events -- Facebook's initial public offering and Google's stock weakness -- aren't unrelated. A big fear circulating about Google right now is that Facebook will drain away revenue by skillfully exploiting all the intimate details it knows about its users to beat Google in the online ad game.

This is just one of several myths holding back the stock -- all of which I'll debunk in this column.

image: Michael Brush

Michael Brush

Cheap at $600?

Google's slide into value territory is also a clear sign of how skittish investors remain -- which makes them more prone to believing the myths about Google.

"The market today is valuing predictability over growth," says Thornburg Value Fund (TVAFX) co-manager Connor Browne, and in the process it's handing you a bargain in Google. Some simple numbers show this.

The search giant currently trades at 13.8 times 2012 earnings, according to Thomson One Analytics. Google is actually about 20% cheaper than that if you strip out its $135.50 a share in cash, points out Michael Scanlon, a tech analyst with the John Hancock Balanced Fund (SVBAX). Taking out cash puts this forward price-to-earnings ratio -- a common measure of value -- at 10.7. At the same time, analysts project medium-term earnings growth of almost 18%.

In contrast, large consumer staples stocks like Kimberly-Clark (KMB) on average trade for around 15.5 times earnings, even though their projected earnings growth is much lower -- at around 10%, says Browne.

This looks like a huge disconnect, created by skittish investors crowding into stocks that appear to provide some certainly. "We think Google will grow much faster than the demand for toilet paper," says Browne. "Yet it is priced at a discount to the average consumer-staples company. We think it is an incredible opportunity."

He's not the only one. "We think Google is worth $800," says Barton Hooper, an analyst with Weitz Value Fund (WVALX), which counts Google as its fourth-largest holding.

Investing great Peter Lynch used to favor companies that traded for a price-earnings-to-growth ratio below 1, or 1.5 in the case of rapid-growth companies like Google. By this yardstick, Google looks really cheap; it trades for a PEG ratio of 0.59 after you strip out cash from the equation.

Of course, shares would not be so cheap if there weren't some fears surrounding Google's outlook that at least sound legitimate. Here's what they are, and why they are wrong.

Myth No. 1: Facebook will eat Google's lunch

With all the buzz around the upcoming Facebook IPO, the myth that Facebook is a huge threat to Google is gaining traction. After all, it's no secret how much time people spend on Facebook, and how much the website knows about its users. This seems like an advertiser's nirvana.

In contrast, Google's social website, Google+, can't match Facebook. And its search feature can't be found on Facebook. So Facebook will naturally take online ad dollars from Google.

The biggest problem with this worry is that Facebook has been around for years, yet Google has continued to grow by leaps and bounds. If Facebook was going to be such a problem, we would have seen it in the Google numbers by now, believes Browne, at the Thornburg Value Fund. In contrast, Google revenue growth continues to be strong, and Google's share of online ad revenue grew to 48% last year, from 31.5% five years ago, he says.

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This makes sense, because Google's model of serving up ads next to searches probably helps advertisers more than Facebook's approach of linking ads to user interests, believes Scanlon. "Facebook will do really well. But there is greater utility for advertisers in Google," he says. This is because more people are in "buy mode" when they are searching than when they are chatting on Facebook.

"I think they will co-exist. It doesn't have to be a zero-sum game," agrees Ryan Jacob of the Jacob Internet Fund (JAMFX), the best-performing technology fund over the past 10 years, according to Morningstar. "They can both do well."