A "Gajillion" Reasons to Recruit These Social Stocks

AnnaLisa is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

"There are literally gajillions of people who are unhappy with their current jobs," intones Brian Baumgartner, The Office's hapless Kevin, in an amusing YouTube video by Monster Worldwide (NYSE: MWW) entitled "The Wake Up Call" exhorting cubicle drones to visit Monster.com and do better. Warning: turn down your volume.

However, investors in Monster Worldwide and Facebook (NASDAQ: FB) may need a wake-up call as LinkedIn (NYSE: LNKD) has become the go-to gold standard for job seekers and employers helping it double since its IPO two years ago.

What are your strengths? Your weaknesses?

The online job search arena is full of independent web sites, Craigslist, CareerBuilder.com (owned by Gannett), even Twitter, but is really dominated by three names: Facebook, Monster Worldwide, and LinkedIn.

Monster as an online job search site works differently from LinkedIn listing jobs employers post (for a fee) which are free to search. Monster has a menu of paid tools for job seekers: resume writing, tags to make your application stand out, etc. It also has a menu of escalating paid services for recruiters such as resume skills algorithms to make it easier to winnow down eligible candidates. Another revenue stream is paid advertising.

According to eBizMBA.com which posts the most popular job web sites updated monthly, Monster.com is the number one job site as of June 1 averaging 28 million unique monthly users and 200 million registered users in 40 countries. It also has a cooperative agreement with Facebook, its Bee Known service.

Facebook Jobs was supposed to have challenged LinkedIn's dominance according to a Forbes article from July. Not so fast. It's really just another aggregate jobs app listing 2.39 million jobs. Although the National Association of Colleges and Employers found that half of US employers do use Facebook in the hiring process and 54% of those expect to use Facebook more this doesn't vault Facebook into the social recruiting trinity. Nor is it a needle mover for the stock.

LinkedIn's supremacy continues despite having a fraction of Facebook's one billion monthly active users at only 223 million members. Job hunt advice sites and career centers still mandate creating a LinkedIn profile as job One.

Facebook as a recruiting utility hasn't overtaken LinkedIn because it's still considered more social than professional. To get a job using Facebook really requires work to professionalize your page, reset privacy settings, regular updating, and so on. Not that keeping up on LinkedIn is effortless but LinkedIn has the most serious and easy to navigate platform for a career profile.

Setting up a LinkedIn profile is free for a job seeker but paid memberships do offer advantages to the serious candidate like the ability to add video and graphics, allowing members to know who has been looking at their profile, and more paid only perks. The company sells advertising as part of the business model.

Tell me about your past performance

Assuming there are a "gajillion" possible job seekers which of these is the best candidate? LinkedIn has added content from Influencers, leaders in business and politics including Sir Richard Branson, President Obama, and Meg Whitman providing unpaid opinion pieces. This led to a 63% uptick in member engagement in Q1. Monster also has content related to business and the job hunt.

LinkedIn reported Q1 net income of $22.6 billion up from $17 billion in the year ago period, once again beating expectations and its own guidance as it has since its debut.

Its trailing P/E is a whopping 507.40 with a PEG of 2.09. Even with a forward P/E of 85.44 it is still Amazon-like as leap of faith stocks with high P/Es yet both keep powering higher, rewarding buyers. Considering the enormous P/E its short interest is low at 4%.

Pacific Crest initiated coverage on June 19 with an Outperform. Analysts have a median target of $220. Its corporate governance risk score is a low 3 and the company has no debt.

Keeping in mind that LinkedIn is a platform to manage one's professional identity and not a job site like Monster its utility is broader than Monster's, especially with a foray into content they hope will boost their Marketing Solutions (i.e. advertising), currently only driving a quarter of revenues.

Monster Worldwide is getting some interest from momentum investors in hopes of a buyout. On valuation it is the most attractive at a 10.52 trailing P/E and the lowest PEG at 1.18. It is up almost 30% from its 52 week low of $4.02 but still down 40% plus from its high.

EPS growth declined 100% last year and revenue growth slowed by 14% plus, but its four analysts believe it can grow earnings by 15.44% over the coming year. Its sales growth rate is a negative 7%. In contrast, analysts expect 180% earnings growth for LinkedIn over the next year.

With a negative 29.64% profit margin it's not surprising Monster has a 22% short interest. However, it has been exiting or downsizing international markets that haven't performed and if not bought out it plans to buy back shares.

Facebook has a forward P/E of 31.44 and a 1.42 PEG. Buying it as a social recruitment platform isn't yet prudent, but as a social network there are still questions about the youth demographic moving onto alternative social platforms, twitter, Tumblr, Google Plus, etc as well as competition from Pinterest for older users, mainly women.

Although the revenue growth rate is 37% for this last year, earnings growth has declined 100%. Total revenue for 2012 came in at $5.02 billion and for the 1st quarter of 2013 is $1.46 billion. Total EPS for 2012 was $0.03 and Q1 of 2013 was $0.09, so things are looking up.

Where do you see yourself in five years?

Ah, that old job interview chestnut. Of these three candidates LinkedIn has the most sustainable model in the online recruitment space for the next five years. Monster Worldwide may improve its metrics but as a long term hold I find it less compelling. As for Facebook, this battleground social media stock, things are moving fast in its space and I wouldn't want to guess what it will look like in five years or whether it has figured out monetization of its gajillion users..

For your amusement

<img alt="" src="https://lh3.googleusercontent.com/8Tj7ERZVR3x4dftMAgzykKCY8g8SLobSVLB9j4rNAwDD9XfQH0940O4pG0YYsN_bycYazLYOrQCbHOpjSnBLWJCXFy0Qen685zapNuoNokOa1XTfIGvUYD6MkU2vM1IPfw" width="554" />

(Photo source:http://pinterest.com/pin/217720963205750864/

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AnnaLisa Kraft has no position in any stocks mentioned. The Motley Fool recommends Facebook and LinkedIn. The Motley Fool owns shares of Facebook and LinkedIn. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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