At this point, you've gotten quite an earful about Facebook
So if you're reading about Facebook but hoping to invest in something better, here are five companies that excel where Facebook falls short.
1. Facebook has an unproven business model
Because Facebook is online and most of its revenue comes from advertising, it's tempting to think of the business model as very similar to that of Google. However, the search-centric model of Google is different from Facebook's social-networking platform, so it'd be a mistake to automatically assume that Facebook's advertising business will be as successful as Google's. Maybe more worrisome, as technology continues to shift Facebook users to mobile devices, the company will have to grapple with a platform that hasn't been particularly lucrative for it thus far.
On the polar opposite end of the spectrum, Procter & Gamble
2. Facebook's stock appears vastly overvalued
On the basis of Facebook's forward earnings -- that is, what Wall Street expects the company to earn over the next year -- the company's price-to-earnings ratio is 52. In simple terms, that means -- growth aside -- that if investors were given every cent of Facebook's profit, it would take 52 years for them to be paid back for their investment. Only after that would they be making a profit.
Just staying within the world of tech, there are plenty of investment options with lower valuations. Google's forward P/E ratio is 13, Apple's
One of my favorites, though, is Intel
3. Facebook doesn't pay a dividend
A stock doesn't have to pay a dividend to be worth buying, but in recent years many investors have recognized the value that comes from a quarterly cash profit payout. Since Facebook is still in high-growth mode, it's smart for it to hold onto its cash. But that's not the case for many companies -- even in the historically dividend-unfriendly tech sector.
For investors who want a company that pays them back, the mighty Apple is one place they can look. The company had been reluctant to start distributing its massive cash hoard to investors, but it finally cracked earlier this year and announced that it will finally start paying its shareholders. It won't be a huge dividend -- yields from companies the likes of Intel and Microsoft are higher -- but Apple should have a lot of room to grow that payout in the future.
4. Facebook is overhyped
The time to buy a stock is either when everyone is (mistakenly) pessimistic about the company or they're just plain ignoring it. The worst time to buy? When everyone is hyped up about the stock and can't stop talking about it. Even though Facebook's stock has fallen precipitously since the IPO, it still falls in the latter category.
Table Facebook, at least for now, and check out some ignored or beaten-down stocks. One such idea is Advance Auto Parts, the $5 billion auto-parts retailer. The company has a great track record, but the stock got pummeled recently because of a lackluster forecast for this year.
5. Facebook's top brass is questionable
I applaud Zuckerberg -- he's done an outstanding job creating a huge business and making himself insanely wealthy. But do I want to invest in a company run by a 28-year-old who was reluctant to show up for the meetings for the company's IPO? I'm not so sure. Worse, do I want to own a company that thinks it's OK to endow insiders with special voting rights? Umm …
Ditch Facebook and opt for Berkshire Hathaway
Don’t like those? Three more to try on.
Didn't find what you're looking for here? My fellow Fools have three more ideas -- each of which I'd prefer over Facebook. To check out these world-beaters, get your free copy of "3 American Companies Set to Dominate the World."
The Motley Fool owns shares of Oracle, Google, Microsoft, Berkshire Hathaway, Cisco Systems, Apple, and Facebook. Motley Fool newsletter services have recommended buying shares of Berkshire Hathaway, Apple, Microsoft, Procter & Gamble, Intel, and Google and creating bull call spread positions in Microsoft and Apple. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
Fool contributor Matt Koppenheffer owns shares of Berkshire Hathaway, Intel, and Microsoft but has no financial interest in any of the other companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter, @KoppTheFool, or on Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.