2 Must-Own Tech Stocks With Almost No Competition

Last week the Cowen team hosted a dinner during the Internet Retail Conference and Exhibition (IRCE) in coordination with the EliteSEM search agency and several of its partners, including Kenshoo and Custora. The executives from these top companies were apparently able to really highlight to the analysts the big gains being made in social media advertising and search budgets.

Facebook

This incredible, fast-growing company remains the face of social media, and a challenger seems nowhere in sight. Facebook Inc. (NASDAQ: FB) has been grinding higher over the past year after a big run up in 2013 to early 2014, when the stock almost doubled, and the social media behemoth doesn’t look to be slowing down. The revenue change over the past year was an astounding 54.69%, and it comes in as a top Internet stock pick at Cowen.

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With Instagram, premium video and Graph Search capabilities, some analysts feel that the company can drive revenue growth even without a huge increase in advertising placement. The Cowen teams thinks investor sentiment is very positive and that mobile advertising growth via different silos can be added this year, in 2016 and beyond. They also reported that Instagram is opening its platform for advertisers, particularly direct response advertisers via new direct response ad units like mobile app install ads. With Facebook’s talented and experienced sales team, this should only continue to drive revenue higher.

Kenshoo is a Facebook Marketing Partner that has somewhere between $5 billion and $6 billion in direct response advertising spending running through its platform. The Cowen report suggested that based on conversations, social ad spending on the company’s platform was up a staggering 100% year over year. Furthermore, Facebook continues to capture a larger share of its clients’ digital advertising budgets, in part driven by Facebook video, which is the fastest growing segment, according to Kenshoo.

The Cowen price target for the stock is $94. The Thomson/First Call consensus price target is a touch higher at $95.57. The stock closed on Friday at $82.14.

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Google

The technology giant is striving to expand customer offerings and increase the brand’s reach. Google Inc. (NASDAQ: GOOGL) recently introduced Android Pay, a revamped photos, and a lightweight Android derivative operating system (OS) they call Brillo, which is designed to power the Internet of Things. The company also recently announced a new mobile version for the Android OS, which is expected to be released this fall.

While Google has competition in search, the Cowen team points out that the company’s search advertising is still rising year-over-year a stellar 20% from big direct response advertisers and a solid, but lower 15% from more traditional retailers. As many have expected, search traffic on desktop is growing modestly on a year-over year basis, but aggregate traffic growth is being driven by mobile.

Google remains the undisputed leader in Internet search, and when you add in a diverse portfolio that includes everything from the Android platform to YouTube, from the Google Wallet for automatic pay to the Google Flights tool, continued growth is not out of the question.

Some prominent Wall Street analysts also think that Google can be a big winner in augmented reality (AR) in both the hardware and services categories. With Google Glass and the company’s big investment in Magic Leap for hardware and virtual reality and AR apps powering the computing of the future, Google’s massive trove of data will be key to enabling both.

Google stock has dramatically underperformed over the past year and, with a gigantic stash of cash and new directions in countless technology silos, the future is extremely bright for the company.

The Cowen price target is set at $693, while the consensus target is lower at $638.30. The stock closed trading on Friday at $549.53.

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Facebook is almost unchallenged in social media, and while Google does have various search challengers, it is still the 800-pound gorilla, with its huge, deep pockets and capabilities. Think about it, when looking for an answer that is out in cyberspace to practically any imaginable question, very few, if anybody, say “Yahoo it.”