Media

The Key Component That Will Drive These 3 Top Social Media Stocks

One thing that has become very obvious to anybody with a computer, smartphone or, soon, wearables is the increased presence of the ubiquitous social media. It is seemingly everywhere, and the biggest players in the space tend to dominate their niche. In a new report from the technology team at UBS, one thing will continue to not only dominate the space, but probably be the deciding factor on the winners and, most assuredly, the losers in the future.

In the new UBS research report, the analysts noted that at the recent UBS tech conference a key takeaway was the increasing importance of content marketing as a means of establishing mind share with end customers. The UBS view is that content will become a critical driver of both user growth and engagement levels over the coming years for the major social media platforms. For the three top stocks investors continue to flock to — Facebook Inc. (NASDAQ: FB), LinkedIn Corp. (NYSE: LNKD) and Twitter Inc. (NYSE: TWTR) — this is the ultimate end-game.

Facebook

Facebook continues to dominate the social media world. The company has been on a huge roll the past three earnings reporting quarters, and many on Wall Street feel that the stock has plenty of room to run. Mobile revenue and advertising numbers have skyrocketed, and the company has started to add a search component that could prove to be another earnings silo for the social media giant.

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Recently Facebook unveiled its much-anticipated ad platform that has an answer for advertisers who want something better than the Web-restricted cookie to track and target ads. Atlas can follow Facebook members where they digitally roam, from Web to smartphone, smartphone to tablet. With more than 1.3 billion registered users around the world, Facebook’s e-commerce potential is also very significant and growing larger monthly.

Many on Wall Street agree that consumers increasingly will find media and information through their social graph, which puts Facebook in the middle of this information exchange. They also believe the continued growth of smart devices increases Internet usage, and the shift to 4G likely will increase mobile advertising monetization. That combined with increased video content is expected to keep this monopolistic leader on top.

The UBS price target for Facebook is $92, and the Thomson/First Call consensus target is at $86.90. Shares closed Wednesday at $73.33.

LinkedIn

Dominating the interconnecting of business professionals, LinkedIn has more than 300 million members worldwide. Millions more are being added every year, making it the most valuable social networking site for business-to-business marketing today. The long-term Wall Street view remains very positive on the stock, given the company’s large addressable markets, its well-established business model, a still new but promising opportunity in sales and marketing solutions, and the stock’s relative underperformance. The stock is down 15% from the highs printed in September of last year, compared to a gain for the S&P 500 during the same time period.

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UBS has a $255 price target on LinkedIn. The consensus target is set at $219.61. Shares closed Wednesday at $219.61.

Twitter

This stock remains one of the classic “love it or hate it” stories on Wall Street. Many analysts have come back around on the Twitter story, and they consider it one of the individual stocks they find the most interesting now. They point out that Twitter has been strong lately on hopes of improving user trends and continued revenue strength with new ad formats (app downloads and buy button). They also remain very bullish on the company’s potential to monetize non-plugged in users.

The company held a very positive analyst day on November 12 that provided Wall Street firms with a solid look forward at the game plan for Twitter, as well as how the company intends to further monetize its users.

LinkedIn has a UBS price target of $60, and the consensus target is lower at $53.42. The stock closed on Wednesday at $39.71 a share.

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While they vary in the specific approaches, these three are the undisputed leaders in their respective categories. Long-term aggressive growth accounts should consider buying on any big pullback in these stocks.

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