3 Stocks to Buy Instead of Twitter Inc

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TWTR - 3 Stocks to Buy Instead of Twitter Inc

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I happened to read some of the recent news stories about Twitter Inc (NASDAQ:TWTR) cracking down on abusive and harassing tweets and it got me thinking about TWTR stock.

3 Stocks to Buy Instead of Twitter Inc (TWTR)

More specifically, I wondered how Twitter is ever going to grow to the point where it has enough dedicated users that it makes money from its advertising. There are probably many books in circulation that discuss nothing but how social media companies like TWTR convert monthly active users to daily active users.

If you look at a list of the top 100 people and brands with the most followers, you’ll see that the top three are Katy Perry, Justin Bieber and Barack Obama with 105 million, 102 million and 96 million, respectively.

Of those three, you might guess that Katy Perry would generate the most revenue for Twitter, but that’s not necessarily the case. While she has 105 million followers, she only has 8,711 tweets. If every follower read every tweet that would be 915 billion views. It’s likely nowhere near that.

Advertisers aren’t going to pay top dollar for the potential of 915 billion views, but they will pay handsomely for a surer bet on 1.35 billion daily active users, the number Facebook Inc (NASDAQ:FB) delivered in its latest quarter.

Donald Trump tweeting every day is excellent for business, but unless you and I are reading them on a daily basis, the advertising potential is limited.

For Twitter to be successful, it has to have people and brands that have lots of followers, follow lots of other people and tweet daily. Anything less and advertisers will stay with Facebook as their primary social media vehicle.

As a result, TWTR stock at $18 is way out of its league.

Let me save you the money by pointing you to three stocks to buy that also trade around $18. You can thank me later.

Stocks to Buy Instead of Twitter: KeyCorp (KEY)

Stocks to Buy Instead of Twitter: KeyCorp (KEY)

If you live in the Great Lakes or the Northwest, you might be a customer of KeyCorp (NYSE:KEY), who have more than 1,200 branches in 15 states generating revenue of more than $5 billion annually.

Based in the beautiful city of Cleveland, Ohio, the last time I recommended the regional bank was October 2011. It’s up 21% annually in the six years since. Unfortunately, I also suggested selling JPMorgan Chase & Co. (NYSE:JPM) and it gained 24% annually in the same period.

Oh, well. You win some and you lose some. I lost. Well, long-term, I still like KEY stock.

However, since I wrote that article, it’s gone on the offensive making several acquisitions including buying Cain Brothers & Company, a healthcare-focused investment bank and First Niagara in 2016.   

It has gone from being the hunted to becoming the hunter.

Stocks to Buy Instead of Twitter: Manchester United (MANU)

Trading at a 52-week high, Manchester United PLC (NYSE:MANU) isn’t going to get you rich off its dividend — currently yielding 1% — but it will provide you with a soccer team to cheer for in the English Premier League.

MANU stock’s having a breakout year in 2017, up 27% year-to-date, 11 percentage points clear of the S&P 500.

It’s had a rough go as a public company, but with Facebook and Amazon.com, Inc. (NASDAQ:AMZN) looking to acquire Premier League streaming rights and Manchester United delivering record earnings, it’s onward and upward.

Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia.

Not to mention, it makes money, unlike TWTR.

Stocks to Buy Instead of Twitter: Sally Beauty (SBH)

Sally Beauty Holdings, Inc. (NYSE:SBH) is definitely my value pick of the three stocks to buy instead of TWTR.

It kind of competes in the same space as Ulta Beauty Inc (NASDAQ:ULTA), although it leans heavily on professional salons for much of its revenue; my best guess is it gets 55%-65% of its annual sales from professionals and the general public for the rest.

The downside of SBH is its debt. As of June 30, it had $1.8 billion in long-term obligations — in the trailing 12-months the company paid out $107 million in interest — or 78% of its $2.3 billion market cap. That’s definitely what’s holding the stock back, down 33% YTD.

The upside: It has consistent free cash flow to pay down debt over the next few years. If it can reignite sales growth, its 6.9% cash return [free cash flow + net interest expense / enterprise value] is a great deal in these overheated markets.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/10/3-stocks-to-buy-instead-of-twitter-inc/.

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