AOL, Inc. (AOL): It’s Time To Take This Stock Seriously!

AOL and its competitors-

AOL faces tough competition from tech giants like Google Inc (NASDAQ:GOOG) and Yahoo! Inc. (NASDAQ:YHOO). While Google reported robust results for the fourth quarter with a net income of $2.89 billion as compared to $2.71 billion for the fourth quarter of 2011, things were going bleak for Yahoo before the new CEO Marissa Mayer took charge. It has been expected that under her guidance Yahoo will gradually pick up its market share, which it has been losing to its competitors including Google. The following table shows a comparative analysis of AOL with its competitors Google and Yahoo. Even though Google marches way ahead of AOL in EPS and P/E comparison, a low PEG works in favor of AOL. With a low PEG as compared to its rivals and the industry standards, AOL proves to be an attractive investment.

The bottom line is that AOL has three major revenue streams, all of which look viable. There are still danger signs, of course: AOL’s display ad business looks shaky and even though the company’s revenue may come from three streams, nearly all of the profit is still coming from the legacy subscriber businesses.

“What exactly is AOL?” you might ask yourself. As a consumer product, it’s a bunch of websites. As a business strategy, it’s an ad company. As a growth business, it’s a third-party digital advertising network. And as a profitable business, it’s mostly none of those things, but rather, overwhelmingly, an anachronistic online membership service.

People looking for 2013′s turnaround story should stop fussing over Yahoo! — it’s AOL that is poised to be this year’s comeback kid!

The article It’s Time To Take This Stock Seriously! originally appeared on Fool.com and is written by usha patodia.

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