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Forget Twitter: Buy this Secret New Web Stock Instead

Twitter is a great company. But it's a terrible stock.

As the largest social media offering since Facebook (FB), Twitter continues to dominate the headlines and generate intense interest from investors looking to cash in on the next Google, Inc. (GOOG).

But in spite of the overwhelming buzz, shares are down 9% since going public in late October. That's because after gapping open 73% on its first day of trading, Twitter is ridiculously overvalued, trading with a P/S (price-to-sales) ratio of 44 times.

To put that into perspective, if Apple Inc. (AAPL) had the same P/S ratio, shares would be trading at $8,287.

That's why investors looking to cash in on the recent surge in IPOs should look past Twitter and into a little-known Israeli company that went public in early November.

Much like Twitter, this company has developed game-changing technology that is disrupting industry standards. But unlike Twitter, it looks cheap for a stock with so much upside potential.

[More from InvestingAnswers.com: 5 Reasons This Market Leader Is Poised For Impressive Growth]

It already has more than 39 million registered users and incredible global diversification spanning 190 countries. That has shares off to a hot start, up more than 22% since its IPO in early November. Take a look at the market-crushing gain below.

Wix.com Ltd. (WIX) is a game changer in the web development industry. It offers a cloud-based development platform for individuals and small businesses to build, customize and manage websites.

The service is a huge leap forward in web development technology because it enables users to bypass hiring expensive designers and programmers and launch a professional website at a fraction of the cost.

This is the kind of game changer my colleague Andy Obermueller looks for every month for his Game-Changing Stocks newsletter, which explores the next big investment in the markets. Read about five game-changing trends he's identified here.

[More from InvestingAnswers.com: Capture Growth And A 4% Yield With This Little-Known Industry Leader]

Wix's business model is built on two levels of service. Its basic package lets users design a website through its Wix platform at no cost. But in order to go live, users have to pay a fee and activate their own URL.

That two-tiered model has attracted more than 39 million basic subscribers and more than 700,000 premium subscribers.

And looking forward, its subscriber base is in position to keep growing.

According to the U.S. Small Business Administration (SBA), 52% of small-business owners aren't running a website. The disconnect is even more pronounced internationally, with a survey from Web.com concluding that 59% of global small businesses don't operate a website. The main reason? Some 54% of respondents said the cost of a web presence was too prohibitive.

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With small businesses ready to invest tens of billions into websites and digital marketing in the next few years alone, Wix is in position to score millions of new customers looking for affordable web solutions. And that will have a huge impact on revenue and lift earnings into the black.

Wix is also tapping into the high-growth, small-business app market. In October 2012, Wix launched its App Market Place, offering in-house and third-party apps that can be integrated into user websites. Although the App Market Place hasn't materially impacted revenue, booking more than 6 million downloads in its first year sets the foundation to profit from the booming market.

Wix is also a play on global economic strength, with its cloud-based platform providing services to users in 190 countries. This provides great diversification for Wix to access emerging markets where small-business spending on websites trails developed economies.

Risks to Consider: Much like other software startups, Wix is vulnerable to low barriers to entrance and upstart competition. Although it's already an entrenched leader with an impressive user base, it must maintain leading practices to stimulate fresh demand.

Action to Take --> When a company has yet to record a profit, the best way to analyze valuation is with sales. On that level, Wix looks like a huge bargain compared to Twitter. Its P/S ratio of 8 times is a huge discount to Twitter's 44 times. That gives Wix a much better chance of producing the 844% return Google has produced in its first 10 years as a publicly traded company.

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