If You've Only Got Room For One Internet Stock..... FB, GOOG, and YHOO Poked and Prodded

Though it's not exactly an apples-to-apples comparison (ok, not a red-apples-to-red-apples comparison), the market and the media have gotten comfortable with comparing Yahoo! Inc. (NASDAQ:YHOO) to Google Inc. (NASDAQ:GOOG), and comparing either of those two to Facebook Inc. (NASDAQ:FB). Makes sense. They're all in the internet business, and depend heavily on traffic to generate revenue. Ergo - in the name of diversity - it's very likely an investor only feels the need to own one of those names. The question is, which one is the best one to own?

The merits are clear. Google dominates search traffic, with a market share currently hovering around 70%. Though it's stumbled a bit on the earnings front of late, even Google's worst is still better than the rest of the search market's best. And, there's no denying GOOG has used its size and clout/muscle to simply overpower competitors.

Yahoo! is, or was anyway, a discarded relic of the web, rising to be synonymous with the internet in the late 90's only to drift into irrelevance over the course of the first several years of the 2000's. New CEO Marissa Mayer, however (an ex-Google executive), has sparked some new life in the stock in just her first few months on the job. Investors are starting to believe again too, as evidenced by the fact that YHOO shares have rallied 30% in just the past three months. That's the best move in over a year, and shares are trading at their highest levels since 2008 as a result.

Then there's Facebook... a name nearly everyone had high hopes for right before the May IPO, and a name nearly everyone was disappointed in following the IPO. The problem? The website could certainly attract users, but couldn't necessarily convert that traffic into revenue. The ad-revenue machine got turned on in the meantime though, as FB unveiled a powerful real-time ad-bidding scheme, and most recently announced that its relationship with online game publisher Zynga had ended. In simplest terms, Facebook can now develop its own games, and players of Zynga games will no longer have the ability to share their gaming progress with their Facebook friends.

So which of the three is the top internet name to own right now? No fanfare needed here - it's (still) Google.

That's not a dig on either of the other two companies; they're both fine companies. But, in terms of value and opportunity for investors, GOOG offers more right now.

For what it's worth - though it's not everything - Google is priced the lowest in terms of a forward-looking P/E. Shares are priced at 13.7 times 2013's projected earnings, versus 16.4 for Yahoo!, and 42.0 for Facebook. To be fair, you own companies for where they're going in the future, and it's entirely possible FB and YHOO may be 'cheaper' than GOOG based on what's apt to be their respective earnings level in 2014 and beyond. But for now, based on what we can see, Google has the least premium to justify. [Editor's note: P/E levels still don't mean a great deal when talking about high-profile stocks.]

On the technical front, Google shares again have more upside in front of them and less vulnerability than Yahoo! and Facebook shares do. As was noted about, both of those stocks are sitting in the shadow of big rallies, while Google is just starting to renew a long-term uptrend following a pretty severe pullback in October. It even used the key 200-day moving average line as the pushoff point.

All that being said, the biggest reason of all to choose GOOG over YHOO and FB right now is neither a technical one nor a fundamental one... it's the X-factor, or the intangible forces that actually move stocks and markets, without clear reasons why.

Right now, the X-factor edge working in Google's favor is that expectations of it are low, while expectations of Yahoo! and Facebook are high; that's part of the reason those latter two stocks have rallied so nicely of late. But, expectations can be funny things. The market has a way of doling out - even creating - bad news when it's least expected. Conversely, following last quarter's disappointing numbers from Google, expectations of it are low. It's a prefect setup for a surprise, and a major swing in the stock's underlying sentiment.  

The relative rankings will certainly change in the future, but for right now, Google is the name to use if you only have room for one internet name.