AOL, Inc. (AOL): Is This the Best Internet Turnaround Play?

Google Inc (NASDAQ:GOOG) is a much larger company, and revenue and earnings have consistently improved annually. Google is the most visited website in the United States (second-most visited website in the world), and its product diversification goes beyond the internet.

Just like AOL, Inc. (NYSE:AOL), its efficiency and debt management are excellent. In short, it’s one of the best-run companies in existence. While short-term stock price fluctuations are possible, Google Inc (NASDAQ:GOOG) should continue to reward shareholders over the long haul — barring a complete market collapse.

Google seems to have a goal of entering industries where it knows it can steal a significant amount of market share. Its Android operating system is a huge player in the mobile device business, its search dominates competitors, its maps are widely known as the best option available, and Google Inc (NASDAQ:GOOG) Fiber has the potential to change the way we watch television and use the Internet.

And those are only a few examples. You should also expect more innovation from Google moving forward, as that’s what the company loves to do with its enormous cash pile.

Yahoo! Inc. (NASDAQ:YHOO), like AOL, is a turnaround story. After three years of revenue declines, revenue rebounded slightly in 2012. And despite a slight setback in 2011, earnings have trended higher over the past several years. Unlike AOL, Yahoo! Inc. (NASDAQ:YHOO) has made successful acquisitions to target a younger audience. The most recent example is Tumblr.com, which has an over-represented age demographic of 18-24.

However, over the past three months, pageviews-per-user declined 12.34%, time-on-site dropped 12%, and searches plummeted 25%. It’s possible that Tumblr lost its cool image after a big public company like Yahoo! Inc. (NASDAQ:YHOO) acquired it, but it’s too early to tell. Like AOL and Google, Yahoo!’s management has also done a superb job with efficiency and debt management.

Conclusion

Google should be the safest play going forward, and Yahoo! is in the midst of a successful turnaround, making it a quality investment option. AOL is bit more of a gamble. The company seems to be making wise decisions, but execution is still questionable. If AOL, Inc. (NYSE:AOL) is correct about future internet trends, then it could benefit in a big way in the future, but it still needs to attract a younger user base in order to see sustainable top-line growth.

The article Is This the Best Internet Turnaround Play? originally appeared on Fool.com and is written by Dan Moskowitz.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Google. The Motley Fool owns shares of Google. Dan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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