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These Job Portals Can Be Solid Investments

June 23, 2014 | About:
Vinay Singh

Vinay Singh

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In today's still struggling economy, there are many who are seeking employment after being laid off or downsized. One of the best places to do so is via career-oriented websites such as Monster Worldwide (MWW). Although there are many potential opportunities listed on Monster.com, job seekers and shareholders alike may also strike gold in some other unlikely online domains, as well.

Providing employment solutions in non-traditional ways

Monster Worldwide is a global employment website that offers both online and mobile employment solutions. The site operates with customers on a worldwide basis. Just some of the ways that Monster utilizes the Internet with its customers is via its flagship website as well as through a strong social-media presence and mobile applications.

Recently, in an effort to expand its growing adoption among enterprise companies and staffing firms, the company launched SeeMore in France- the very first semantic query and workforce-analytics recruitment platform in the market. This platform will essentially help in building relationships and managing talent that will ultimately help user companies in growing their businesses.

While Monster's profit margins were in the negative figures (mostly due to one-time charges), the company did generate revenue just shy of $900 million and a return on equity roughly in the mid-single digits. Presently, Monster's stock is trading very near its 52-week low, with analysts estimating a rise in share price of nearly 68% for the rest of this year. With a low EV/EBITDA ratio of less than 4, any position at current prices can provide a substantial growth opportunity for potential investors.

Branching out by standing out

Certainly, those who are in the job market realize that networking is one of the best ways to find new employment. This may be one reason for the many new members of LinkedIn (LNKD), an online professional networking site.

One of the key components of LinkedIn is the company's hiring solutions area that essentially enables companies and professional entities to find, contact, and hire qualified candidates for open positions. In addition, through its subscriptions area, LinkedIn enables employment recruiters and corporate hiring managers to network with potential job candidates.

Recently, LinkedIn introduced a new feature on its site called LinkedIn Contacts, which enables the consolidation of a user's contacts, notes, and conversations in one convenient place. The premise behind this feature is that it allows users to stay in better contact with their most important relationships.

LinkedIn is currently valued at roughly $20 billion. While it pays no dividend to its shareholders, the company's share price is hovering very near its 52-week high. Yet, with lower-than-hoped-for earnings, analysts opinions are split between rating the shares as a Buy or a Hold.

Still, LinkedIn's share price has already doubled since the IPO, and currently trades at an expensive looking EV/EBITDA ratio of more than 100 times. However, if you want to invest in social-networking companies, Linkedin is definitely the most attractive stock in the market right now, as it’s expected to grow at a much faster pace than many of its industry peers.

Nevertheless, I still think investors should wait for the shares to drop to the mid-to-high $150 to $175 level, as the shares present an attractive risk/reward there. Sub-$175 is where investors should start a long-term position.

Today's tough job market has called for employment seekers to become much more creative in order to stand out - and what better place to do so than on eBay (EBAY). This diverse website - once considered "the world's largest garage sale" - is no longer just a spot for selling old Pez dispensers and baseball cards.

The website has now branched out from primarily "cheesy" sales of pre-owned products from individuals to a major hub for corporate retailers, as well as real estate sales, service advertisements, and a place for job seekers to find work.

eBay's diversity has paid off handsomely, too. The company ended the first quarter with an increased profit margin of nearly 20%, and revenue of almost $3.8 billion. One potential fly in the ointment for eBay could be the passage of a new Internet sales-tax law. It remains to be seen, though, as to exactly how - or how much - eBay's traffic and transactions would be affected in the future. Presently, analysts estimate the stock price will rise by more than 21% over the next 12 months.

As with both LinkedIn and eBay, Monster will also likely need to continue offering more diversified online services to its site users - otherwise it could be at risk of losing job posters, job seekers, or both. And, like many other companies with a predominantly online presence, the new key to more site visitors - and transactions - is to provide enhanced mobile applications.

The bottom line

Although Monster's financials were not up to expectations, the resulting plunge in share price may provide investors with an opportunity to obtain a great growth play. With analysts assigning a one-year average target price of just above $7.30, investors would do well if they could purchase this stock at or below $5 per share.


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