Facebook Inc (FB), LinkedIn Corp (LNKD): What Does The Cash Reveal?

Although both companies look to have strong futures, even if Facebook Inc (NASDAQ:FB) has lost some of its luster with younger users, I’m not interested in either stock at this time. Shares of LinkedIn Corp (NYSE:LNKD) trade at a huge premium to Valuentum’s intrinsic value estimate, and I think any hiccup in the story (including the lighter than anticipated guidance given for 2013) could cause shares to plummet. Facebook Inc (NASDAQ:FB), on the other hand, looks fairly valued, though I like its long-term prospects. Neither stock fits the criteria to establish a position in the portfolio of our Best Ideas Newsletter.

In the online space, my favorite name remains Google Inc (NASDAQ:GOOG). Google has capitalized on strong advertising momentum, increased global Android market share, and potentially has a strong pipeline of products. Google Glasses and self-driving cars could both be game-changers. Importantly, however, the company currently has fantastic fundamentals, so the product pipeline is simply icing on the cake. Either product could translate into multi-billion dollar categories, but we like the possible business solutions of Google Glasses most. Large amounts of real-time data could be of great use in nearly every industry, including medical, mining, and logistics.

Even without accounting for new products, we think Google Inc (NASDAQ:GOOG) can grow its revenue at a compounded rate of nearly 15% over the next 5 years, driving compounded annual free cash flow growth of 12%. We hold shares in the portfolio of our Best Ideas Newsletter.

The article Facebook and LinkedIn Early in Monetization; Neither a Bargain originally appeared on Fool.com.

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