| Stock (Symbol) | Stock Price | |
Facebook (FB) |
$39 |
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| Data is as of | Expected to Report | Sector |
August 12, 2013 |
Oct 21 – Oct 28 |
Technology |
| Sharek’s Take | ||
 Facebook put out a game-changing quarter last month, taking the stock from one with no momentum to one with all the momentum. Last quarter, FB was expected to earn $0.14 vs. $0.12 = 17% profit growth. Instead it made $0.19 vs. 0.12 = 58% profit growth. Quick math tells me if FB just earned 19 cents last quarter, it should earn 25 cents in each of the next four quarters, or $1 total. The stock got a P/E of 45 when it was expected to grow 17%, so it should at least get a 45 P/E now. $1.00 x 45 = $45 minimum stock price. But, since we don’t know how much FB can earn (it just knocked the cover off the ball), then a 60 P/E — a $60 stock — is possible.
Facebook stock is now a must-own for growth stock money managers (and there’s a lot of them folks). This company just grew profits 58%, and now these money managers have to accumulate shares — they have to show investors they own FB. |
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| One-Year Chart | ||
 Here’s the current one-year chart. Profit growth is expected to be 50% next quarter, and I bet the company beats again. Analysts have FB earning $0.71 this year, so the 54 P/E isn’t low, but keep in mind my $1 figure for the next four quarters. |
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| Earnings Table | ||
 Last quarter, Facebook had profit growth of 59%, and revenue growth of 53%. Ad sales — the bulk of sales — rose 61%.FB beat by 5 cents, after missing by a penny a quarter earlier. If FB beats the street by a wide margin again, you could see the stock shoot up as analysts crank up estimates. I think this will happen.Annual Profit Estimates jumped. 2012’s went from $0.57 to $0.71. The company could make $1 this year. Maybe more.Quarterly estimates show at least 50% growth in two of the next four quarters. |
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| Fair Value | ||
 Clearly this stock is worth 60 times earnings (the company could earn $1.50 or $2.00 next year, so the P/E has to be inflated to account for this). I see $60 by next year, maybe this year. |
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| Ten-Year Chart | ||
 What’s holding FB back now is the slew of investors who bought in around the IPO for $38 to $45 a share. Now those people are selling, getting out around even. That’s all that’s holding FB back. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
2 of 24 |
Facebook is one of the hottest stocks to own. The best thing it has going for it is the shy is the limit on how much the company can make. $1 this year? $2 next year? $3 in 2015? This $38 stock is worth $45 but should hit $60 by next year — maybe sooner. |
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Aggressive Growth Portfolio
1 of 12 |
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