Apple Inc. (AAPL), Facebook Inc (FB), Yelp Inc (YELP): Keep Your Eyes Peeled

Let’s filter two potential opportunities together:

Yelp Inc (NYSE:YELP)
Cumulative reviews are up 41% from the year-ago quarter. Active local business accounts have soared 62%. Yelp Inc (NYSE:YELP) is the typical example of a company benefiting from the app revolution: A location-aware service that connects people with great local businesses, 59% of searches came from mobile.

But at 19 times sales, is the lofty valuation worth the opportunity? That’s a tough one. With management guiding for about 220 million in revenue in 2013, Yelp Inc (NYSE:YELP) is still a small player with too many uncertainties to merit its price.

Questions linger: When will the company begin to report profits? Will the company capture large enough scale to facilitate a meaningful network effect that is large enough to keep competitors at bay?

Facebook Inc (NASDAQ:FB)

Bam! That’s the sound of the sudden monetization of a half of a billion monthly active users in one year’s time. In the second quarter of 2012, Facebook Inc (NASDAQ:FB)’s 543 million mobile monthly active users were nothing but a giant untapped opportunity. Swiftly, and almost suddenly, Facebook Inc (NASDAQ:FB) changed all that. Today, 41% of Facebook Inc (NASDAQ:FB)’s ad revenue comes from mobile.

Going forward, Facebook Inc (NASDAQ:FB) likely still has enormous room for improvement in monetizing mobile. With 41% of ad revenue coming from mobile and 71% of the company’s monthly active users on mobile, Facebook is still making far more revenue per user on desktop than it is on mobile. Though this could be viewed as a weakness, it could also be viewed as a huge opportunity. Given Facebook’s performance so far, I’d go with the latter.

Most importantly, the company looks poised to endure for decades. Facebook is wildly profitable with a 74% gross profit margin and its powerful network effect should keep users glued to the service.

Unfortunately, the stock isn’t undervalued — but that doesn’t mean you can’t nibble on a few shares to hold for the long haul.

Keep your eyes peeled
Yelp and Facebook are just two stocks benefiting from the app revolution. A few other examples worth looking into might be LinkedIn, Google Inc (NASDAQ:GOOG), Baidu Inc (ADR) (NASDAQ:BIDU), and Zillow Inc (NASDAQ:Z). There won’t be any dirt-cheap bargains, but investors shouldn’t let their initial thoughts on valuation prevent them from digging deeper.

This year, 52.2% of all mobile phones shipped worldwide will be smartphones, according to IDC. Already, Apple and Google Inc (NASDAQ:GOOG) have an installed base of 600 million iOS devices and 900 million Android devices, respectively. The foundation has been laid, and now it’s time for mobile services to reap the rewards.

There’s still time to profit from the app revolution.

What companies benefiting from the app revolution have made it into your portfolio?

The article It’s Not Too Late to Profit From the App Revolution originally appeared on is written by Daniel Sparks.

Fool contributor Daniel Sparks owns shares of Apple. The Motley Fool recommends Apple, Baidu, Facebook, Google, LinkedIn, and Zillow. The Motley Fool owns shares of Apple, Baidu, Facebook, Google, LinkedIn, and Zillow.

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