Facebook: Buy Today or, Gasp, Wait?

"To hell with investing rules, buy me some Facebook!" This is the sort of attitude I am getting from people - usually retail invetors - who follow the market. Seems like it will obviously be bid up in price, so buy it, right? To quote Indiana Jones, that's what scares me.
Well that and the fact that Facebook (ticker: FB) doesn't meet the Investor's Business Daily criteria for buying a stock. I'm a big fan of the IBD way as it has worked for me the best.

The full list of IBD ratings don't show yet on their proprietary Market Smith system, but FB's sales and earnings per share do.

And that's all it takes for me to pause. The most recent quarter's earnings per share (EPS) show a -9% change over the same quarter last year. Ouch, not what you'd expect from a star tech standout. It's best for a company to have 25% EPS growth or much more. Facebook did show this several quarters ago, perhaps it will return to form.

Projections for EPS growth next quarter, according to Yahoo finance, suggest a 20% EPS growth, suddenly back in the ballpark. (I've since looked back over this number and IBD suggests analysts forecast only 9% growth next quarter. Not good enough for me.)

Sales growth is much more encouraging with a 45% growth in the most recent quarter (compared to the same quarter a year ago). Projections suggest a 64% growth for next quarter. Pretty darn good for a beheameth of a company. Heck, great for any company.

One troubling note is that EPS has been decelerating or flat for 5 quarters straight, albeit next quarter will end this trend. This goes for sales as well.

Another consideration is that Facebook will be valued at just shy of $80billion at the $38 opening price and 2.1 billion shares outstanding (man that's a lot of shares). Apple is the world's largest company by market capitalization, at nearly $500billion, just to give a point of reference.

The point is that Facebook is already huge, and even though it's a world-wide company with more potential world-wide growth, it's one of the biggest stocks in the market. How much can we expect it to appreciate? This is one of my concerns as an investor. I wish Facebook went public when it was worth a mere $10billion. We'd have earned a knock-out return.

The other issue that concerns me is that this is a brand new stock. It's always best to wait and let the stock demonstrate what the market thinks of it - that is, how it trades. Does it go up in strong volume? Does it tank on volume? Or does it settle into a nice consolidation? That's what I wait for, a solid consolidation which is the market's version of a gestation period before hatching a winner, launched by a break out.

If you are hot to trot for Facebook, go click "like" on your Facebook page and buy one share to participate in this historic IPO, but for the love of your E-Trade account, wait before putting serious money into it. FB isn't going anywhere. If you wait a little, FB could still be your BFF.