Yelp Inc (YELP): Solid Growth Is Expected for This Social Media Company

While Groupon is still operating at a loss, Facebook and Google continue to be the dominant players in the social media and search markets, respectively. Although Facebook and Google are financially sound, Facebok needs strong growth to sustain its extremely high P/E.  Overall, Google Inc (NASDAQ:GOOG) has the most impresssive fundamentals among potential competitors with a solid balance sheet (over $50 billion total cash with only $7.38 billion total debt) and strong cash flow while fairly valued at P/E of 27.48.

What next?

Despite all these competitors, Yelp Inc (NYSE:YELP), which generates 102 million unique visits a month, has a unique edge with its strong focus on bringing consumers and local businesses together. Yelp can better understand what users are looking for. Recently, Yelp also launched a revamped Nearby feature, which delivers more relevant information to users. By making itself an integral part of the decision-making process, Yelp creates strong stickiness with its users.

With near 60% and 43% estimated revenue growth for 2013 and 2014, Yelp is expecting to generate profit in 2014. Yelp has a higher revenue growth rate as compared to other social media companies, such as Facebook and Groupon. With increasing offerings, Yelp is a solid bet for revenue growth. Furthermore, Yelp also has a healthy balance sheet with near $94.50 million total cash and zero total debt. Yelp is a great bet for investors looking forward to invest into the social media company with fast growth and a healthy fundamental.

Foolish take away

By engaging with its users and delivering what users are asking for, Yelp continues to evolve and strengthen its competitive position in the commercial world. More upside is expected for Yelp with promising growth outlook.

The article Solid Growth Is Expected for This Social Media Company originally appeared on Fool.com and is written by WenYu Huang.

WenYu Huang has no position in any stocks mentioned. The Motley Fool recommends Facebook. The Motley Fool owns shares of Facebook. WenYu 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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