Yahoo! Inc. (YHOO), Facebook Inc (FB), Akamai Technologies, Inc. (AKAM): Three Big Stocks in the Internet Industry

A valuable stock

Despite some downgrades in rating, I would still recommend buying Facebook Inc (NASDAQ:FB). You might wonder why, given that it trades at an extremely expensive 625 P/E ratio. The answer comes easily: look at the forward P/E ratio of 38.9. You should notice that the company is expecting outstanding growth over the next year or so. Investors have proved that they enormously trust this company too, leading the stock to its current valuation. In case these figures do not fully convince you, below you will find some other reasons to believe that Facebook Inc (NASDAQ:FB) will outperform its peers, and is therefore, worth investing in even at such high multiples:

Facebook Inc (NASDAQ:FB) holds a massive user base and therefore, it has the opportunity to capitalize on it though diverse advertising methods. Global online advertising is expected to increase 14% during 2013 and this should help the company’s prospects going forward.

Although it took the firm a while to launch mobile advertising products, it now dominates this area as well. Expected mobile revenue is $1.5 billion for 2013 (Morningstar), which represents about 30% of 2012´s total revenue.

Advantage in advertising is not only provided by the amount of people entering Facebook Inc (NASDAQ:FB) daily, but also by the time spent on the page. The website retains surfers longer than any other known one; the average user spends about seven hours (actually about 6 hours and 40 minutes, to be precise) on this site each month. This figure at least triples the values offered by other top 10 web brands.

Its scale and loyal customer base have attracted app developers in the past and will most likely continue to do so. As a result, monetization figures for these apps should increase, both through ads and the sale of virtual products in social gaming apps.

Facebook Inc (NASDAQ:FB)´s acquisition strategy has proven profitable in the past and it will most probably drive its income in the future as well, as strategic purchases further widen its product offering.

Bottom line

Although all of these internet services companies offer great growth prospects, I would put my money down in Yahoo! Inc. (NASDAQ:YHOO) right now. Trading substantially cheaper than most its competitors while presenting plenty of upside, this is a value stock. Buy now before its impending success is priced in.

The article 3 Big Stocks in the Internet Industry originally appeared on Fool.com and is written by Victor Selva.

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