Facebook parent Meta Platforms (Nasdaq: FB) has recently been trading at a lower price-to-earnings (P/E) ratio than slower-growing companies such as The Coca-Cola Co. or McDonald’s.
Meta’s stock price is being held back due to worries about slowing growth, along with concerns about privacy and regulatory issues.
But there’s still a lot to like about the company, which recently changed its name from Facebook to Meta Platforms to reflect a wider range of operations.
For starters, the company owns the Facebook, Messenger, Instagram and WhatsApp social network platforms, serving more than 3 billion people monthly and monetizing them via digital advertising, among other things.
It also boasts the Oculus virtual reality ecosystem, featuring Quest 2 headsets.
Meta Platforms is a cash cow, raking in more than $100 billion annually and generating tens of billions of dollars in free cash flow per year.
The company has so much cash that it’s been rewarding shareholders by repurchasing many shares.
During its third quarter, it bought back more than $14 billion worth of its stock, and announced a $50 billion increase to its share repurchase program.
(The Motley Fool owns shares of and has recommended Meta Platforms. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook, and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors.)
Ask the Fool
Q: I want to invest in a certain mutual fund, but it’s not available through my brokerage. Now what? – C.C., Portland, Oregon
A: Many brokerages offer their customers access to hundreds or thousands of mutual funds, but they might still exclude a fund you want.
You may not be out of luck, though: Sometimes you can simply buy shares directly from the fund’s provider – such as Fidelity, Vanguard, Charles Schwab or any of scores of other mutual fund companies.
Note that some mutual funds can be closed to new investors for certain periods. Mutual funds will sometimes close to new investors if their managers believe they have – or will soon have – more money than they can invest effectively.
At such times, they’re right to close instead of simply parking money in less promising investments.
If you can invest in funds you want via your brokerage, that can be most convenient, as you’ll be able to buy and sell easily online via your existing account, and you can move money between investments fairly easily – though your brokerage may charge a commission each time you buy or sell.
If you don’t like your brokerage’s fees, though, you might get a better deal investing in specific funds directly.
Q: What do you think of stock investing strategies such as selling in May and reinvesting in October? – M.B., Manteo, North Carolina
A: That’s market timing, which is generally a risky move, since the stock market may surge while you’re out of it.
No one knows, after all, just what the market will do in the short term. We at the Motley Fool prefer to be long-term investors, aiming to hold our shares for many years.
My Dumbest Investment
My dumbest investment? Well, I saw on the charts that a certain penny stock was climbing fast from $0.20 per share, so I bought a bunch of shares at $0.38 apiece.
The stock went up to $0.40 per share – and the next day it sank to $0.02.
I bet a million folks sold out and took a 100% profit, while I was left looking silly.
It’s been hovering around $0.02 ever since then, costing me a $395 loss. – H.R., online
The Fool responds: You may have been a victim of a common “pump-and-dump” penny stock scheme.
Penny stocks are those trading for less than about $5 per share.
They’re often tied to shaky companies, and they can be easily manipulated.
Schemers might hype a penny stock online or via a newsletter, getting gullible people to buy shares because they seem so cheap – and, often, because great success is allegedly around the corner.
The buying sends the stock price up, and then the schemers sell their shares, sending the price back down and wiping out many investors.
Never assume that a low-priced stock is a bargain.
Many penny stocks fall to close to zero, while a $500-per-share stock could be undervalued and on its way to $1,000 or more.
For best results, steer clear of penny stocks – and always research companies well before investing in them.