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Better Buy: Alibaba vs. Facebook

Facebook (NASDAQ: FB) and Alibaba (NYSE: BABA) both initially seem like undervalued growth stocks in this frothy market.

Facebook's family of apps -- including its namesake platform, Instagram, and WhatsApp -- reach 3.3 billion people every month, but its stock trades at just 20 times forward earnings. Alibaba serves 779 million shoppers in China annually and controls over 40% of the country's cloud market, but its stock trades at just 21 times forward earnings.

Those valuations are low relative to their projected growth rates. Analysts expect Facebook's revenue and earnings to rise 25% and 13%, respectively, this year. They expect Alibaba's revenue and earnings to jump 51% and 37%, respectively, in fiscal 2021, which ends next month.

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