Time for Social Media Shopping

 | Jun 05, 2012 | 7:30 AM EDT
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This pullback has been brutal and there is still the risk of more downside ahead. But in the short term it appears that we might be heading towards a pause in this selloff.

Therefore, if you haven't already, you should be getting your shopping list ready for some stocks that have been pummeled and are looking for a decent recovery once some others start to jump back in.

I'd put Yelp (YELP) on top of the list. It's been shredded thanks to Facebook's (FB) poor performance since its IPO. It's the real deal in terms of the next generation of the yellow pages for mobile. But Monday morning it broke its IPO price of $15 after getting up to $28 earlier this year. It's officially half off. I like it because it's a pure play, it's in a space that works for mobile monetization and it's bite-sized currently under $1 billion, meaning it's easier to take out.

Pandora (P) announced some fabulous earnings last week, including raising guidance for the year. Yet, it's 20% off since then. The questions about Pandora had been if it can keep growing its subscribers more than its content costs. That question was really answered in the earnings. Pandora is another winning vertical in the new mobile world. People want to listen to music on their mobile devices and they always will. It's also a very digestible size for someone to acquire them.

Youku (YOKU) has actually sold off much less than I would have expected to in this broader market decline. It's a Chinese high-flying stock with no profits. It's going through the process of acquiring its biggest competitor in the online video space Tudou (TUDO). It was even up more than 5% on Monday. Why? It's going to be a long-term winner in China. It's really the HBO Go of China, with no traditional cable pay TV channels over there. Now, it will get its biggest competitor over the next 6 months. Originally, this stock went over $30 when the Tudou merger was announced. It's now at $23.

Although the social media selloff has also taken down Facebook, Zynga (ZNGA), and Groupon (GRPN) and they are due for a meaningful bounce from these levels if we get any kind of fix for Europe, I would be more careful with these names longer term.

These are the guys with the biggest monetization questions hanging over them as the world moves more and more to mobile. Let's see some real profits from them first before becoming true believers on a longer-term basis.

But in the short term, they certainly also due for a big snap back.

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