LinkedIn Corp (NYSE:LNKD) is an online professional networking site, providing services that are needed in all economic climates. Not only was it a first-mover, but it can be considered an “only-mover,” as it has no notable peers.
LinkedIn Corp (NYSE:LNKD) is often compared to Facebook and other sites used for social reasons. It’s a considerably different beast. Notably, its revenue is not ad-driven, as is Facebook’s — only 23% of LinkedIn Corp (NYSE:LNKD)’s Q1 2013 revenue came from ads. This is a service people (employers in particular, as “hiring solutions” accounts for 57% of revenue) are willing to pay for. Additionally, it’s less subject to fickleness, as there’s no “cool” factor needed.
The PEs and PEG indicate the stock is pricey. However, this is usually going to be the case for growth stocks with considerable future potential. Additionally, forward-looking metrics (forward PE, 5-year PEG) are based on analysts’ estimates. While analysts usually do a decent job of projecting a company’s earnings one year out, projecting them further out — such as five years — is a different story.
Two bear arguments are that the U.S. market is nearly saturated and there’s a lack of user engagement. These are factors that need to be monitored. However, the saturation point doesn’t take into consideration expansion beyond the company’s current focus or the international opportunities. LinkedIn Corp (NYSE:LNKD) is expanding its services. For instance, it recently acquired Pulse, which will allow users to create customized news feeds. It’s also been growing international revenue, with 38% of its Q1 revenue coming from international markets.
Bottom line
Often times in the stock market, “winners keep winning,” so one can find future outperformers among current ones. Celgene Corporation (NASDAQ:CELG), Starbucks Corporation (NASDAQ:SBUX), and LinkedIn have performed well during the first half of 2013. More notably, however, they’ve been longer-term winners too.
Celgene Corporation (NASDAQ:CELG) and Starbucks Corporation (NASDAQ:SBUX) look attractive as long-term core holdings. Both are in attractive spaces, have solid growth potential ahead, and sport solid metrics. They both have strong ROEs, indicating they’re very efficient at generating profit from shareholders’ investments. LinkedIn Corp (NYSE:LNKD) has super-strong growth and its prospects are rosy. However, the stock is very richly valued. Its best fit is as a non-core holdings for non-risk-adverse investors who follow their holdings closely.
The U.S. government has piled on more than $10 trillion of new debt since 2000. Annual deficits topped $1 trillion after the financial crisis. Millions of Americans have asked: What the heck is going on?
The article Top 10 Performing Large Cap Stocks Through First Half of 2013 originally appeared on Fool.com and is written by BA McKenna.
BA McKenna has no position in any stocks mentioned. The Motley Fool recommends Celgene, LinkedIn, and Starbucks. The Motley Fool owns shares of LinkedIn and Starbucks. BA is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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