The Best Way to Invest in... the Internet?http://www.fool.com/investing/general/2013/02/21/the-best-way-to-invest-inthe-internet.aspx Brian Stoffel
February 21, 2013
There's no such thing as a sure bet in the investment world. The best we can do as investors is consider all of the facts available to us, meditate on those facts, consider possible futures, and then read ourselves to see if we are comfortable buying a piece of a certain company or not.
For myself, one trend that I am comfortable investing in right now is the Internet. Just 20 years ago, if I needed a recipe for something, I had to find it in a cookbook; if I had to write a paper, it probably involved long hours at the library.
I don't need to belabor how much the Internet changed the way we do certain things. Instead, I want to focus on what enabled me to find that recipe and that information for my paper so much faster: search engines.
Without a doubt, search engines are some of the most popular websites out there. Take a look at top 20 sites in the world, and you'll see what I mean.
I believe that investing in search engines -- and the cash they produce through advertisers -- is a pretty solid bet. This is especially true when you consider that well over half of the world's population still doesn't have regular access to the Internet.
Of these 20, I would say that four of them are as close to pure search plays as you can get: Google, Yahoo!, Baidu, and Yandex. Though Microsoft has a hand in a number of companies mentioned above, and Bing is its primary search engine, the company is fundamentally different than the others.
So the question is: Of these four, which is should you buy?
First, let's just look at the numbers
One look at this list points out several important distinctions between these companies. Among the most important:
Before going any further, though, I want to get back to my question: Which company should you buy? In reality, I'm asking the wrong question. The first one should be: What are you looking for in an investment?
After that, answering which you should buy becomes much easier. So below, I've summarized which are good buys for certain investors.
It should be noted, however, that Google's stock may not rise in price as much as the other players here. It is far more well entrenched and its home markets more saturated. And if Larry Page leaves any time soon, or if the company starts losing money on mobile searches, then it may be time to reevaluate your investment thesis in Google.
While Yahoo! isn't much of a force anymore in the United States -- Bing actually provides search results domestically -- it is still a major player overseas. It is among the top 10 most-visited sites in countries like Brazil, Argentina, the Philippines, India, and Pakistan.
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