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Why Facebook, Twitter and Jumei Shares Are Poised for Gains

Stocks in this article: TWTR FB JMEI

The second stock is Facebook, the large, well-known social media company. FB's shares have been in an unstoppable uptrend after it posted strong second-quarter 2013 earnings and saw an acceleration in the mobile market. Facebook has continued to expand and make bold acquisitions to secure its leading position in the industry. The stock's trend is in line with the company's growth.

The stock was trading at $73.98 midday Thursday. The stock is in a clear uptrend with higher highs and higher lows. Price action is in favor of the bulls:

  1. It is in an uncharted zone with no serious resistance above it.
  2. The stock formed a range following its latest earnings report and is now ready to break out of that range.
  3. The company is in a leading position in its industry.
  4. Suggested entry level: $75-$76. Target: None.

Courtesy of StockCharts.com

The third stock is Jumei International, a fast-growing Chinese online retailer with a focus on beauty products and an expanding product line. This company is young, was founded in 2010, and is led by a passionate CEO, Leo Chen.

Courtesy of StockCharts.com

Traditionally speaking, online retailing is a very difficult business in which to make profits. There's a lot of competition. Jumei, however, has managed to post net income since 2012 and scored seven consecutive profit-making quarters. That is miraculous for a young start-up company.

Read More: GDP Is Better Than Good, but Interest Rates Are Still Not Going Up

The stock is trading at $31.33 at midday Thursday and is resting near its previous resistance level, which now serves as support. This is a playable place because after the company posted another better-that-expected earnings report, the stock sold off hard. But that selloff could shake out all of the weak investors and give and give real buyers a chance to increase their positions. The active entry is around $34.00-$35.50, and the target is $45 by the end of the year. At the time of publication, the author owned shares of FB.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.


TheStreet Ratings team rates FACEBOOK INC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate FACEBOOK INC (FB) a HOLD. The primary factors that have impacted our rating are mixed, with some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we find that the stock itself is trading at a premium valuation."

You can view the full analysis from the report here: FB Ratings Report

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