| Stock (Symbol) | Stock Price | |
Facebook (FB) |
$94 |
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| Data is as of | Expected to Report | Sector |
August 10, 2015 |
Oct 26 – Oct 30 |
Technology |
| Sharek’s Take | ||
 I originally started writing this article with Facebook’s Fair Value at 40x earnings, implying a stock price of $83. That would make FB seem overvalued. But it’s really not. Facebook just jumped out of the $80s and has settled in right here around $94. The P/E is 46, and when you consider revenue grew 39% and it is FACEBOOK you have to think this stock is really worth 45x earnings. Especially in this stock market where a few key growth stocks get super favorable treatment. So we re-did the stock charts with FB’s Fair Value P/E of 45. Now the stock’s fairly valued here (and it really is) and the 2016 Fair Value of $124 gives the stock solid upside of 32%. Another thing, profit growth is only expected to grow 17% this year, and qtrly profit growth for 2016’s first 2 qtrs is expected to be 31%-32%, faster growth could be the catalyst to send the stock to another level. Also, Facebook owns Instagram and WhatsApp and profits could come from either of these two unexpected sources. |
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| One-Year Chart | ||
 A little while back I sold some of my Facebook shares anticipating profit growth would slow yet the stock still broke out on 19% profit growth when the P/E was in the 40s. The stock market nowadays is perhaps overvaluing select growth stocks. Or perhaps I’m undervaluing them. |
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| Earnings Table | ||
 Last qtr sales grew 39%, profits 19%, expenses 82%. FB beat the street by a few cents and hasn’t been beating by much lately. Annual Profit Estimates continue to climb, especially 2016’s which jumped from $2.61 to $2.75. Qtrly profit could accelerate next year but there’s plenty of time to lower that, to spend to grow of course, right Mr. Brin? |
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| Fair Value | ||
 Nice upside on this stock for investors looking ahead to next year. Seems fairly valued now but may make its way past $100 soon. |
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| Ten-Year Chart | ||
 Nice rise look of the chart now, I was lucky to get in at the start of this run. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
12 of 25 |
Investors don’t mind the fact Facebook is overspending to grow, as they sent the stock to a new high. I feel Facebook is now beloved again and has the ability to push past $100 and make it to $124 next year. |
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Aggressive Growth Portfolio
N/A |
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