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The stock to buy on bad jobs data: Strategist

Talking Numbers

Bad jobs data may be good for this stock, says one strategist.

LinkedIn's fall from its September highs offers an opportunity to buy the stock, says Wunderlich Securities. The company reiterated its buy rating and that sent shares in the social media giant up over 1% on Friday. LinkedIn's stock traded at $218 at the end of the week, though it's quite below the $257 price it had four months ago.

Chad Morganlander, portfolio manager at Washington Crossing Advisors, agrees with Wunderlich that LinkedIn is a buy. His company is a subsidiary of Stifel, Nicolaus & Company which has LinkedIn as a client and is a market-maker in the company's stock.

"It's a premier growth company," says Morganlander. "It's on par with companies like Twitter, Facebook, and Amazon. You're looking at revenue growth rate of roughly about 40% for the next several years."

(Watch: Why Facebook isn't a good platform for recruiters)

Morganlander has a price target of $300 for LinkedIn by the end of 2014. However, because its sensitivity to market risk, he says investors should take a cautious approach when buying shares of LinkedIn.

"This is a growth company," says Morganlander. "It's a high beta stock. You want to have very, very pragmatic positioning in your portfolio because of the volatility."

Steven Pytlar, Chief Equity Strategist at Prime Executions, is also bullish on LinkedIn based on the stock's reaction to two events. First is the that shares broke below its $208 support level earlier in the week only to pop up back again.

"We call that a false breakdown," says Pytlar. "It's a positive signal."

(Read: Fed officials could ignore ugly jobs report—for now)

The second reason Pytlar likes the stock is because it was also up on the day negative jobs numbers were released.

"LinkedIn [is] a recruiting/hiring company levered to the employment market, reacting positive to negative news," says Pytlar. "It gets above $222 resistance, it could squeeze up  back to the old highs from there."

To see more analysis by Morganlander and Pytlar on LinkedIn, watch the video above.

 

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