LinkedIn Corp (LNKD): Forget Facebook Inc (FB), This Is The Social Media Stock To Own

LinkedIn Corp (NYSE:LNKD) is developing a stable of “influencers.” This program consists of 300 influential high-profile users of the network such as President Barack Obama and Bill Gates. These influencers are able to syndicate their posts for increased exposure. The goal is to create an informational hub and publishing platform for original content, while adding value to the site’s users.

These improvements create what’s called “stickiness” in Internet parlance. Stickiness is what keeps users coming back for fresh content rather than changing to another site.

Taking a look at the second-quarter performance of the company reveals a near 60% revenue increase year over year, net income of $3.7 million compared to $2.8 million for the same time last year and a 37% increase in membership growth.

Add these advantages to the 60% annual analysts’ earnings growth projection over the next five years and it adds up to a lucrative investment opportunity.

Risks to Consider: While the diversification of LinkedIn mitigates many of the threats facing other social networks such as Facebook, risks still remain. The company remains valued on its future growth prospects. It needs to continue its rapid growth to maintain high investor interest. Investing in Linkedin right now is a bet on its continual growth.

Action to Take –> Buying shares now based on the upward momentum makes solid technical sense. However, shares are very expensive at more than $241. My target price is $330 within the next 12 months. This creates an opportunity for option leaps.

Leaps are long-term options that cost much less than the shares themselves and provide the leverage required to participate in the stock’s bullish move without tying up the capital required to buy the shares directly. Just like regular options, one leap is equivalent to 100 shares. Presently, I like the January 2015 $300 strike price leaps, which are selling at $27.50 right now. Substantial profits can be made if shares of LinkedIn move above $300 by the expiration date in January 2015.

P.S. — LinkedIn isn’t the only company making noise in the tech industry. Apple just made a little $256 million move that could have huge consequences on your wallet. Click here to find out how the tech giant is threatening the entire banking industry.

– DS Goodboy

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