The Motley Fool Previous Page

My Top Stock for January

David Meier
January 23, 2012

The revolution is here. It's time to get on board or get left behind. LinkedIn (Nasdaq: LNKD  ) is changing the way millions of professionals manage their careers -- and creating value for members, customers, and shareholders.

I believe LinkedIn has the makings of a multibagger. It's a great business selling at an attractive price, and I am buying shares for my Trends and Trades portfolio. Read on to find out more, and be sure to click the link at the end of the article to follow all of the action on Twitter.

The TNT way
At Trends and Trades, I am looking for stocks with explosive potential, companies that have:

  1. Transformational technologies that can change the world
  2. Nascent performance the market isn't expecting
  3. Talented management that will lead the way

Not only are TNT companies interesting and exciting, but they can create wealth for shareholders. And LinkedIn looks like a long-term winner.

Transformational technology
More than 135 million people have joined the LinkedIn platform. And it's not because of the job listings. Using LinkedIn, people can take charge of their careers: creating connections, gaining valuable insights, and doing so wherever they are. That's how LinkedIn sets itself apart from competitors like Monster Worldwide while trying to keep potential threats like Google at bay.

LinkedIn reminds me of (Nasdaq: AMZN  ) in its early days. Many investors saw merely as an online bookstore. What really wanted to be was the greatest online retailing platform, able to sell whatever it wanted. LinkedIn wants to be the quintessential professional network, where p eople can not only find new jobs, but also find ways to be more productive and successful in their current ones.

LinkedIn's platform continues to resonate. Membership is growing fast, increasing 63% last quarter, or two new members per second! As more people join the network, the more valuable it becomes -- and the more revenue LinkedIn can generate by selling products and solutions to recruiters, enterprises, advertisers, and members.

Nascent performance
I can still hear my business school professor saying, "Strategy is all about value creation and value capture." LinkedIn has the creation part down. The company wants to capture value by generating revenue in three segments: hiring solutions, marketing solutions, and premium subscriptions.

Hiring solutions bring people to jobs and recruiters to people. Marketing solutions help businesses advertise their products and solutions to an engaged audience. Members sign up for premium subscriptions to stay on top of all the relevant news and trends in the professional fields. Over the last 12 months, LinkedIn generated $436 million of revenue, up 117%. Yes, that's right: 117% growth. Here's how the revenue streams looked in the third quarter.



% of Total


Hiring solutions $71 million 51% 160%
Marketing solutions $40 million 29% 113%
Premium subscriptions $28 million 20% 81%

Source: LinkedIn