Internet Giants Baidu.com, Inc. (ADR) (BIDU), Facebook Inc (FB): All-Set for the Next Growth Curve

In terms of valuation, excluding few downsides in its stock price – the stock looks good at an operating margin of 27.6% and earnings per share of $32.47. Its low price earnings growth ratio of 1.26 reflects that the company has strong potential to see high valuation in upcoming years. With an enormous user base of 83% in the global PC search market and a share of 91.6% in the global Mobile search market, Google will remain the leader in search over internet for many years to come.

Facebook Inc (NASDAQ:FB)

Under the iconoclastic leadership of Zuckerberg, Facebook Inc (NASDAQ:FB) generated stronger fourth quarter earnings. It reported 40% increase in revenue, with mobile ad revenue contributing 23% to the company’s total ad revenue. Its improved performance on mobile is attracting more and more advertisers to the prospect of sponsored stories and adverts within apps on the social platform.

Facebook Inc (NASDAQ:FB) has always come up with attractive products on its platform in short intervals. Like the Gifts and Facebook Exchange (FBX), its new feature Graph Search should also bolster its online marketing initiatives. Its Real Time Bidding tool FBX, has enhanced the company’s online ad revenue. Advertising rates for the company’s News Feed ads have risen to 36 % in the fourth quarter. With FBX, marketers are exploiting the site’s re-targeting; reaching customers that earlier visited their site.

In terms of valuation, with the current stock price of $27.85, Facebook Inc (NASDAQ:FB) is closer to its IPO price of $38 and has the potential to further strengthen its place in the market. Analysts are estimating price earnings growth ratio of 1.65 which seems fair enough to buy this stock for the long run. Seeing the accelerating growth momentum, Facebook is a strong bet for long-term growth.

Investors take-away

Baidu, Facebook and Google are enjoying the leadership in the Internet Industry. All these stocks are also covering the increasing demand of the mobile internet market. Though there are some short-term downsides in their stock price because of some macro-economic issues, these stocks are well positioned to offset any kind of downfall. The Trio is likely to rule the internet market for many years to come due to their solid balance sheets, strong market presence and innovative business model.

The article Internet Giants: All-Set for the Next Growth Curve originally appeared on Fool.com and is written by Ranu D.

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