Investors "Like" Potential Facebook IPO

If potential investors could "Like" the prospect of a highly-anticipated and nearly inevitable announcement of an initial public offering for Facebook, it's a good bet that almost all of them would--and not with a nonchalant click of a mouse, but rather with a very large stack of cash.

Knowing that, the next step is determining if this love affair with a non-existent Facebook stock is justifiable, and why.

Recently, Groupon announced its intention to deliver an IPO, much to the pleasure of countless investors looking to get in on what some feel is the makings of another tech bubble. After the success of LinkedIn's (LNKD) offering, people can't wait to get in on the ground floor of the bigger online companies, a la Facebook.

Even foreign stocks such as RENN, the quote-unquote "Chinese Facebook," have drawn great attention at their outset. While online companies continue to be all the rage, the difference between the tech bubble of the early 2000's and this sort of new tech bubble is that the companies in the present actually have means of financial backing (though sometimes, not as much as you'd like to see in a stock going for a stock topping $100 per share initially... we're looking at you LNKD, now closer to $60 a pop).

We don't see a bubble bursting in this regard, and in fact see many online and computer companies, such as MSFT (Microsoft)--which we highlighted earlier--and YHOO (Yahoo), as undervalued. What we do see is a good opportunity to short some of these stocks following their IPOs, including Facebook's eventual offering.

While enticing to "get in on the ground floor," it's important to remember that regular Joe investors aren't the typing boosting these IPOs to double their asking price on the first day. It's major firms and big time investors that drive these prices, while the average investor gets in only after the price has ballooned. Nevermind that the Facebook IPO will be well over $100 a share, something an at-home investor type can only realistically purchase a handful of. A better bet is to short these tech stocks after they inflate.

Don't get us wrong, we like the long term prospects of a potential Facebook stock, but the IPO will rise to epic proportions before falling back to earth. Only then will it begin a steady climb--optimistically the likes of which only Google has seen--but initially, shorting the stock (when it finally arrives) is the option we "like" the most.

Stock Watch: Microsoft (MSFT) Worth a Bing Search

One of the more frustrating stocks on the market also might be one of the more valuable--which is why it's so frustrating. Countless number of amateur traders recognize the potential in Microsoft, which can be had at just $23.98, meaning countless number of amateur traders are just about fed up with the ups and downs that never really amount to anything over the past couple years.

However, while the Stock has maintained a relatively stable price, shareholders have been able to collect a roughly three percent annual dividend. And therein lies the value of MSFT.

You'll hear all kinds of things about how the Windows Phone 7 will compete with the likes of the iPhone, Droid and Blackberry (better late than never, Microsoft) or how once the company fires CEO Steve Ballmer (possible, but not as likely as some will have you believe) the stock will soar to the $30-40 range overnight. And you know what? Those statements might be accurate. Probably not, but there is potential.

But, regardless of those and several other optimistic outcomes, patient investors can sit back and collect a nice dividend without worrying about the price dipping too much more. The important thing for MSFT owners is patience. The stock may continue to drop, but a year from now, it will be at least back at $24 by all estimations, at which point you'll have made back whatever charge incurred by your broker for purchasing the stock. After about a year is when we really expect to see MSFT at minimum reaching $28-30, not astronomical but a nice little return. And in the meantime, shareholders can collect those dividends--one of the best way to make money in a down economy.

Microsoft is lagging behind in the smartphone market, which as we mentioned is a problem they are finally alleviating. They recently overpaid in their purchase of Skype. There is some concern (as a USA Today article pointed out yesterday) that the market for gaming consoles such as the Xbox is shrinking. But put all that aside and take a look at an undervalued (or worst case, appropriately valued) stock that will allow you to collect a dividend while holding a great opportunity for some nice gains in a year or two. Microsoft is making money and will continue to make money, no matter how much of that well has been dipped into by Skype and Bing and other foolish projects. As such, so long as you hold this for more than a month or two, it should be relatively easy to make a profit off of MSFT.