3 Reasons to Own Facebook Stock in Retirement
Retirees may spend hours a day on Facebook, but its stock, lacking a dividend, is often overlooked when it comes to their portfolios.
Retirees may spend hours a day on Facebook, but its stock, lacking a dividend, is often overlooked when it comes to their portfolios. Facebook (symbol FB, $132.78) may not hand out cash every quarter, but it can still be a good retirement stock. It trades at an attractive price and is expected to generate well-above-average profit growth. It enjoys a large and entrenched position in the digital advertising industry, which is expanding rapidly. And it has various businesses that have yet to reach their full potential, analysts say. Here are three reasons Facebook stock looks like a winner for retirees.
(Prices are as of January 26. Estimates and other figures are from Zacks Investment Research, unless otherwise indicated.)
The Price Is Right
Facebook looks like a bargain. The stock trades at 25 times expected earnings for 2017, according to Zacks Investment Research. That seems high until you consider that those estimates put 2017 earnings 28% above 2016 levels. And profits are forecast to increase 30% a year on average for the next three to five years, according to Zacks.
Facebook is not without risk, but investors who take the plunge now are getting a deal, says Credit Suisse analyst Stephen Ju. "We believe Facebook shares are mispriced,” he says.
Sponsored Content
A Stalwart in a Growing Industry
Facebook is the most popular social media network in the world. It has 1.8 billion active monthly users. Advertisers are keen to reach all those eyeballs. Market researcher eMarketer estimates that Facebook takes in 68% of all revenue generated by global spending on social media advertising. Spending in this part of the ad industry is projected to rise from $29 billion today to $50 billion by the end of 2019, or about 20% annualized, according to an analysis by Zenith Media.
Sponsored Content
More Than Meets the Eye
Facebook is more than its signature website. It also owns Instagram, the increasingly popular photo-sharing platform, and mobile instant-messaging apps WhatsApp and Messenger. And it owns Oculus, a virtual reality company. Credit Suisse's Ju contends that the market does not yet appreciate the profit potential from these and other endeavors. Wall Street analysts “continue to underestimate the long-term monetization potential of upcoming new products," he says.
Sponsored Content
-
Pay-As-You-Go vs. Monthly Plans: Which Saves More for Light Phone Users?Light phone users may be paying for data they never use. Here's how pay-as-you-go and low-cost monthly plans really compare.
-
Trump Nominates Kevin Warsh to Fed Chair. How Will This Impact Savers?Here's a look at how Warsh could influence future Fed policy if he's confirmed.
-
How to Avoid Medicare Late Enrollment Penalties ForeverWhether you are still working or planning to retire this year, understanding the 2026 late penalties for Parts A, B and D is essential for your financial health.
-
Nasdaq Drops 172 Points on MSFT AI Spend: Stock Market TodayMicrosoft, Meta Platforms and a mid-cap energy stock have a lot to say about the state of the AI revolution today.
-
S&P 500 Tops 7,000, Fed Pauses Rate Cuts: Stock Market TodayInvestors, traders and speculators will probably have to wait until after Jerome Powell steps down for the next Fed rate cut.
-
S&P 500 Hits New High Before Big Tech Earnings, Fed: Stock Market TodayThe tech-heavy Nasdaq also shone in Tuesday's session, while UnitedHealth dragged on the blue-chip Dow Jones Industrial Average.
-
Dow Rises 313 Points to Begin a Big Week: Stock Market TodayThe S&P 500 is within 50 points of crossing 7,000 for the first time, and Papa Dow is lurking just below its own new all-time high.
-
Nasdaq Leads Ahead of Big Tech Earnings: Stock Market TodayPresident Donald Trump is making markets move based on personal and political as well as financial and economic priorities.
-
11 Stock Picks Beyond the Magnificent 7With my Mag-7-Plus strategy, you can own the mega caps individually or in ETFs and add in some smaller tech stocks to benefit from AI and other innovations.
-
Nasdaq Adds 211 Points as Greenland Tensions Ease: Stock Market TodayWall Street continues to cheer easing geopolitical tensions and President Trump's assurances that there will be no new tariffs on Europe.
-
Dow Hits a Record High After December Jobs Report: Stock Market TodayThe S&P 500 also closed the week at its highest level on record, thanks to strong gains for Intel and Vistra.
