Is Facebook Inc (FB) the Top Technology Pick Now?

Industry Implications

These results hold great significance for other major technology companies that are dependent on advertisement revenues. I believe at this stage the US advertisement industry is a risky business, despite my bullish outlook on advertisement pricing. This high risk increases the attractiveness of stocks such as Baidu.com, Inc. (ADR) (NASDAQ:BIDU) and SINA Corp (NASDAQ:SINA), which drive advertisement revenues from the Chinese market. This doesn’t mean these technology giants are without their risks–there are rumors that Chinese companies can be expelled from the US markets due to their shady accounting practices. Despite these concerns both stock are trading at cheap valuations, and the successful mobile monetization trends displayed by Facebook makes them an interesting option.

However, as the table below shows, Facebook is still the best social media play even if we count Chinese companies. The valuations of search engine giant Baidu are the most attractive of the lot and it’s a strong buy in its own right. The primary reason Baidu is so attractive is its extremely low PEG ratio, which indicates the growth potential available in the Chinese market. Sina has disappointed investors by lowering its fourth quarter guidance. Investors were expecting Sina to report revenues of $152 million for the fourth quarter, but the company expects revenues to be between $132-$136 million. In other news, Sina has reached an agreement with AutoNavi Holdings Limited to enchance and improve their social, location, and mobile (SoLoMo) offerings.

Company P/E PEG
Facebook 35x 1.61x
Baidu 18x 0.66x
Sina 75x 26x

Source: Yahoo! Finance

Bottom line

I believe the 4% after-market drop is an aberration, and these earnings make Facebook one of the best long term technology options. The market will correct itself and Facebook will soar ever higher. The valuations above show that Facebook is the best social media bet in the market.

The article Is Facebook the Top Technology Pick Now? originally appeared on Fool.com and is written by Mohsin Saeed.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

blog comments powered by Disqus
Insider Monkey Headlines
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 44 percentage points in 21 months Learn how!

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!