Does LinkedIn Belong in Your Portfolio?

With shares of LinkedIn (NASDAQ:LNKD) trading around $220, is LNKD an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

LinkedIn is a professional network on the Internet with more than 90 million members in over 200 countries and territories. Through the company’s platform, members are able to create, manage, and share their professional identity online as well as build and engage with their professional network, access shared knowledge and insights, and find business opportunities. It’s platform also provides members with applications and tools to search, connect, and communicate with business contacts, learn about career opportunities, join industry groups, research organizations, and share information. Networking and social contact is rising in importance for consumers and companies all around the world.

LinkedIn has some big plans for the future of job recruiting, as the site is planning to build some complicated algorithms similar to Google’s (NASDAQ:GOOG) search engine to help employers improve their hiring practices, the Financial Times reports. LinkedIn’s new functions aim to create a global map showing when people change jobs, where they move, and what types of skills they take with them. LinkedIn users will be able to select a company and see where its former employees have moved on to next. “We are due a complete increase in the sophistication of the talent marketplace like we saw in the financial marketplace 50 years ago,” Dan Shapiro, senior vice-president for global solutions at LinkedIn, said to Financial Times. “[Using this data] governments will invest in education to fill skills gaps in the economy and companies will make workforce plans figuring out how to invest in their own people and put facilities in the right locations.”