LinkedIn Corp (LNKD): Play the Waiting Game

Competitors

Facebook Inc (NASDAQ:FB) stock has been very volatile since its IPO. From its offer price near $40, the stock once fell to a low of around $17 in September 2012 and is now trading around $28. It recently launched its Social Jobs application, which is believed to be in direct competition with LinkedIn Corp (NYSE:LNKD). It is an aggregated search tool that lets users search job postings among five of Facebook Inc (NASDAQ:FB)’s application partners – Monster Worldwide, Inc. (NYSE:MWW), BranchOut, Work4Labs, US.jobs and Jobvite. Though the initial reviews of the application haven’t been great, with Facebook Inc (NASDAQ:FB) one can never tell what’s in store.

Monster Worldwide, Inc. (NYSE:MWW) is trading at a forward P/E ratio of 10.69, much lower than LinkedIn Corp (NYSE:LNKD).  The stock hasn’t been performing well over the last 14 months and has dropped more than 80% since January 2011. Though the P/E ratio suggests that the stock is undervalued, its negative EPS growth rate forecast for the next five years will limit the upside.

Outlook

The company’s efforts to continuously innovate and release new products and features for its users, grow inorganically by acquiring rapidly growing young companies, and expand internationally will drive the company’s growth in the next few quarters.

But the company has to keep beating market estimates in order for the stock to keep following an upward trend. After the company’s performance in the last two quarters, even a moderate financial quarter in line with estimates might lead to a fall. Since this is not sustainable for a long period of time, the stock has to correct itself in the future. Though further upside movement is still possible, an entry into the stock at this moment is not suggested. Risk-averse investors should absolutely not invest until it reaches at least $161.

The article Play the Waiting Game originally appeared on Fool.com is written by Sujata Dutta.