Why Web radio remains the best stock play in auto tech: Pro
Web radio provider Pandora should have a banner 2014 as it expands into more cars, making it the best play in the intersection of automobiles and technology, RBC's Mark Mahaney told CNBC on Monday.
As automakers unveil the latest innovations in car technology at the International Consumer Electronics Show in Las Vegas this week—including a solar-paneled vehicle from Ford and Google-powered dashboards—Mahaney contends that Pandora is the best way to invest in the Web-connected car trend.
Pandora already accounts for 8 percent of radio hours in the United States, he said, and its move into more automobiles could double that and dramatically increase its ad sales revenue. The company falls into a category of stocks that propel strong revenue and opportunity into a wide-open growth area.
(Read more: Automakers make the big high-tech push)
Mahaney, a managing director at RBC Capital Markets, told "Squawk on the Street." that all of Pandora's revenue "has come from mobile devices, laptops and desktops." Half of all radio listening in the U.S. happens in the car, "and none of that to date has come to Pandora," he added. "That makes Pandora our No. 1 pick in this space."
And how can investors take advantage of the hype surrounding wearable tech, the other trend receiving the lion's share of hype at this year's ICES? Mahaney has a simple answer: Google. The tech giant has Google Glasses and plans to release a smartwatch possibly in the coming months.
"Google is far and away the best Internet pick as a way to play that trend," he said.
In the social sphere, Mahaney believes Facebook holds the edge over Twitter. But the microblogging social network remains a buy, despite a series of downgrades in recent weeks. Twitter's fundamentals should grow more quickly than those of competitors in the next three years, he said, and it solved mobile and engagement problems plaguing Facebook.
"It has a rich valuation," Mahaney said. "It deserves that valuation."
(Read more: Cramer: Facebook 'dramatically cheaper' than rival)
Earlier on "Squawk on the Street," CNBC's Jim Cramer said that those looking to invest in the Web sector should remain wary of online auction site eBay, adding that his charitable trust has given up on the stock.
"This was one of the winners coming out of Internet 2.0, and it has no momentum," he said.
Mahaney had a different take, contending that the online autioneer represented one the most attractive growth stocks, following underperformance that made it his "worst call" of 2013. Strong growth in online payments should help eBay outperform this year.
"They'll return cash to you," Mahaney said. "They'll return more cash to you than any of the other large cap stocks. We like eBay."
—By CNBC's Jeff Morganteen. Follow him on Twitter at @jmorganteen and get the latest stories from "Squawk on the Street."