Welcome to stocks in the news where the headline meets the trendline.
Stock Number One: Facebook (SYMBOL: FB)
And the headline says Facebook is Doomed: Forrester Says Ads Tell a Sad Story—The Daily Ticker:
“Forrester, the respected market research group, has just published a brutal report on Facebook (FB) based on a survey of 395 marketing executives. The conclusion: ‘Facebook creates less business value than any other digital marketing opportunity ... [so] ... Don’t dedicate a paid ad budget for Facebook.’ Facebook responded that the report was ‘illogical and ... irresponsible.’”
I’ve said this since they announced the IPO: I love the company Facebook, but don’t think it’s a great investment. Having said that, it’s a bit rich for a digital rival- Yahoo!- to come out saying that Facebook is doomed.
Once upon a time Yahoo had the exact same problem: Big audience, poorly monetized.
I’m not buying Facebook here at 200 plus times earnings.
But I am watching it closely.
Our Ransom Notes Trendline says: Avoid Facebook
Stock number two: Yahoo! (SYMBOL: YHOO)
And the headline says: Yahoo rises after firm upgrades shares– Fly on the Wall:
“Shares of Yahoo (YHOO) are climbing after research firm Bernstein upgraded the stock in a note to investors earlier today. WHAT'S NEW: Yahoo's stake in Chinese e-commerce giant Alibaba is worth at least $24 per share to Yahoo investors, Bernstein analyst Carlos Kirjner estimated. Yahoo's stake in Yahoo Japan, a Japanese search engine and portal, is valued at $7 per share, while Yahoo has $3 per share in cash, added the analyst.”
Speaking of Yahoo, I loved it at $16 per share and even $18 a share. That’s when no one loved it. It took a while to be right, but eventually value won out.
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Currently the company is trading at a trailing PE of 29 times earnings and a forward PE of 20 times earnings. Earnings estimates are going in the wrong direction however.
If you have profits, use stop loss orders. If not, avoid Yahoo entirely.
Our Ransom Note Trendline says: Hold Yahoo.
Stock Number Three: Groupon (SYMBOL: GRPN)
And the headline says: 5 better bets than Twitter – MarketWatch
“For many of you, this argument will fall on deaf ears. You’re going to buy Twitter just as you did Facebook Inc. FB -0.91%, Zynga inc. ZNGA -2.65% ,Groupon Inc. GRPN -2.08%and every other offering in the social-networking space that produced uneven or less-than promised results.”
For all of next year Groupon is supposed to yield only about .28 cents in profit per share, making the company’s forward multiple about 32 time forward earnings.
Yikes!
This is a company with a track record of disappointing investors, too.
In this market, there are plenty of companies much more attractive with better earnings prospects, if perhaps not as alluring.
Our Ransom Note Trendline says: Avoid Groupon
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