Still growing at double-digit rates, this tech giant’s earnings forecasts for this year were increased by two analysts.
Top Picks Update
Facebook (FB)
From Cabot Benjamin Graham Value Investor
Facebook (FB) continues to innovate. The company recently introduced Marketplace, a place for Facebook users to buy and sell items. Facebook is also adding video to all the company’s products. The availability of video postings on the company’s Facebook and Instagram platforms is attracting new users by the millions. The company will also partner with Hollywood studios to produce original TV-quality shows. Facebook will compete with the original programming content from Netflix, Amazon, Hulu and others.
Facebook produced excellent first quarter results. Sales surged 49% and EPS soared 73%. Management’s focus on advertising on mobile devices is producing exciting new growth.
The company’s current P/E (price to earnings ratio) is a hefty 39.1, but the forward P/E, based on next 12-month EPS, is a more reasonable 30.5. The company is expected to grow earnings at a 27% pace during the next 3 to 5 years, with more rapid growth expected during the next couple of years.
Facebook is a great company with a proven track record and exceptional management, I expect Facebook shares will rise 57% and reach my Min Sell Price of 239.20 within 18 to 24 months. Buy at the current price.
J.Royden Ward, Cabot Benjamin Graham Value Investor, www.cabotwealth.com, 978-745-5532, June 27, 2017