Tech Stocks Winners for 2014 as Ad Budgets Focus on E-commerce

The UBS analysts forecast real-time bidding will continue to grow as a proportion of display advertising, as performance advertisers seek to benefit from improved targeting capabilities. One tangible sign: Facebook’s Custom Audiences saw a 75% increase in the number of advertisers between the second and third quarter this year following recent enhancements.

Here are the four top stocks to buy that are benefiting from the explosion in online sales.

Amazon.com Inc. (NASDAQ: AMZN) is a top stock to buy and also on the UBS Key Call list. The analysts view Amazon as the innovation leader and a top stock to own for 2014 and beyond. In addition to its online retailing muscle, it has a gigantic cloud storage business that continues to dominate rivals. The UBS price target for the stock is $400. The Thomson/First Call estimate is $404.50. Amazon closed on Tuesday at $384.66.

eBay Inc. (NASDAQ: EBAY) may provide investors the best-risk reward profile in the UBS coverage universe, given lower expectations, improved e-commerce trends and the fact the stock has underperformed this year. The analysts also believe eBay benefited from heavy promotions, seller incentives, scarcity of key items at other online and offline retailers and large PayPal mobile volumes. The UBS price target for the stock is $62 and may be poised to go higher. The consensus target is posted at $64. eBay closed Tuesday at $51.93.

Facebook Inc. (NASDAQ: FB) is also one of the top tech stocks to buy at UBS for 2014. Given the correction in the stock since the third-quarter earnings report (down more than 6% versus the S&P 500), the analysts believe it is one of the most attractive risk-reward stocks for next year. The UBS price target for the social media giant is $62, while the consensus target is set at $60. Facebook closed on Tuesday at $46.73.

Google Inc. (NASDAQ: GOOG) continues to dominate Internet advertising and is another top stock to buy on the UBS Key Call List. The search giant has for years been evasive about its plans for a so-called public cloud of computers and data storage that is rented to individuals and businesses. On Tuesday, the company announced pricing, features and performance guarantees aimed at companies ranging from start-ups to multinationals. This is a direct shot across the Amazon bow. The UBS price target for the stock is $1,100, the same as the consensus target. Google closed Tuesday at $1,053.26.

While the e-commerce field continues to be a wide open one, the market leaders are continuing to stretch their dominance. When you factor in the targeted audience that social media can deliver, it is a safe bet that some of the other top names in that field will be higher revenue players as their advertising strategies mature. One thing is for sure, the online advertising genie is out of the bottle and will never be put back in.