When we hunt for stocks that qualify as game-changers, they’re often smaller picks, since that naturally leaves more room for growth. Facebook (FB) is a notable exception, though. Despite its size (Facebook weighs in with a market cap around a whopping $265 billion) and the fact that it’s relatively established (especially in the world of tech stocks), it still boasts some “game-changing” qualities.
For starters, consider the strong, established business. So far this year, Facebook stock has gained 21%, bringing its gains over the course of the past 12 months to a grand total of 29%. Looking back, the fact that the company has beaten expectations with regard to earnings in each of the last four quarters has definitely helped.
And, looking forward, the fact that the company is slated to post almost 29% earnings growth per year long-term on the back of even stronger sales improvements is also an obvious plus.
But, those strong fundamentals are just the beginning for Facebook stock. That’s because the tech leader isn’t sitting still, which leaves the door open for more game-changing additions to the company’s offerings.
Take a look:
Content: While ad revenue from content is already a core part of the company’s business and earnings, the content mix could be changing. With the debut of Instant Articles, there is talk that Facebook could become the primary host for content from news organizations — a shift that could impact the entire media industry.
Instagram: Moving even further from that core business, though, we also have smaller holdings such as Instagram to consider. A more recent announcement from the company spelled out Facebook’s plan to monetize the up-and-coming photo-sharing site, which is popular with a younger audience than its parent site.
“Instagram has officially switched on its advertising API (application programming interface). It’s a major move for the Facebook-owned photo-sharing app that will almost immediately help transform it into a major mobile advertising business to rival Google (GOOG, GOOGL) and Twitter (TWTR).”
Hardware: As if competing with Google on mobile advertising wasn’t enough, Facebook may also begin competing with the company (and many others) on the hardware front. This was first evident when Facebook snatched up virtual reality company Oculus last March, but the focus continued when Oculus agreed to buy gesture-control company Pebbles.
According to the company blog, Pebbles “will be joining the hardware engineering and computer vision teams at Oculus to help advance virtual reality, tracking, and human-computer interactions.” This could be a game-changer, considering the impressive growth rates in store for the VR market. While it’s mostly focused on gaming at the moment, as this Motley Fool piece recently pointed out, there are countless possible uses for the Oculus Rift headset.
Put another way, virtual reality technology itself could be a game-changer for a laundry list of industries, from entertainment to healthcare — and that’s just one reason why Facebook, despite its established status, could still be a game-changer going forward.
Hilary Kramer is the editor of GameChangers, Breakout Stocks Under $10, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network and other media.
