April 15, 2024

The 3 best Internet options for a connected and profitable 2024

The Internet industry is well positioned for long-term growth as a result of growing business demand for digital services, Internet penetration, and the availability of faster connectivity through 5G. In this context, it might be prudent to invest in fundamentally strong Internet stocks such as Tripadvisor, Inc. (TRIP), Data Storage Corporation (DTST), and Yelp Inc. (YELP).

But before we delve into the stock’s fundamentals, let’s first explore the industry landscape.

The outlook for the Internet industry appears optimistic, driven by increased Internet penetration and growing adoption of various online services amid increasing global digitalization. In 2023, there were more than 5.3 billion active Internet users worldwide, representing 65.4% of the world’s population. The number of Internet users is expected to reach 6.54 billion in 2025.

The Internet industry has been gaining popularity due to the growth of e-commerce, rise in cloud computing, on-demand availability of digital services, remote work, online learning, etc. In today’s changing business environment, the global Internet services market is expected to reach $916.50 billion by 2030, growing at a CAGR of 8.2%.

Additionally, the White House has committed to narrowing the digital divide, as evidenced by programs such as allocating $42 billion for universal high-speed Internet access by 2030 in all 50 states and territories.

With these favorable trends in mind, let’s take a look at the fundamentals of three Internet stock picks, starting with #3.

Stock #3: Tripadvisor, Inc. (JOURNEY)

TRIP operates as an online travel company primarily engaged in providing travel guidance products and services worldwide. The company operates in three segments: Tripadvisor Core, Viator and TheFork.

In terms of trailing 12-month gross profit margin, TRIP’s 91.78% is 87.7% higher than the industry average of 48.90%. Furthermore, its trailing 12-month leveraged FCF margin of 15.41% is 101.4% higher than the industry average of 7.65%. Furthermore, the trailing 12-month asset turnover ratio of 0.67 times the share is 30.8% higher than the industry average of 0.52 times.

For the fiscal third quarter, ending September 30, 2023, TRIP’s total revenue increased 16.1% year over year to $533 million. Its non-GAAP net income increased 34.5% from the prior-year quarter to $74 million. The company’s non-GAAP EPS was $0.52, recording an increase of 36.8% year over year. Additionally, its adjusted EBITDA increased 10.4% year over year to $127 million.

Analysts expect TRIP’s revenue and EPS for the quarter ended December 31, 2023 to increase 5.7% and 34.7% year-over-year to $374.12 million and $0.22, respectively. Over the past six months, the stock has gained 27.7% to close the last trading session at $21.06.

TRIP’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, which translates to a Buy in our proprietary rating system. POWR Ratings evaluate stocks using 118 different factors, each with its own weighting.

It has an A rating for Quality and a B for Growth and Value. It is ranked #10 out of 55 stocks in the Internet industry with a B rating. Beyond what is stated above, we also rate TRIP for its momentum, stability, and sentiment. Get all the TRIP ratings here.

Action #2: Data Storage Corporation (DTST)

DTST offers multi-cloud information technology solutions primarily in the United States. The company offers data protection and disaster recovery solutions; high availability, data storage, retention, infrastructure as a service, standby server, support and maintenance, and Internet solutions. It also provides cybersecurity solutions and voice and data solutions such as VoIP and data services.

On November 7, 2023, DTST announced that it had been selected to provide cybersecurity solutions for implementation in the security systems of a prominent sports and entertainment company, demonstrating confidence in DTST’s offerings.

Tom Kempster, president of DTST’s flagship subsidiary, said: “In particular, our cybersecurity solution incorporates powerful artificial intelligence technology with threat intelligence to protect customer infrastructures and accelerate incident response capabilities.”

“This is an expansion of our existing customer relationship, which we believe validates the quality and reliability of our offerings, as well as our ability to cross-sell services across our product lines. We look forward to future technological modernizations with this client over time,” he added.

On July 27, 2023, DTST announced that it had secured a multi-year, subscription-based contract with a major US food distributor, providing managed disaster recovery solutions to reduce recovery time for critical data and accelerate recovery. resumption of normal business operations. .

This contract not only marks DTST’s largest presence in the food industry, but also signifies the company’s success in securing high-margin subscription-based contracts, strengthening its position in delivering crucial business resources and services. .

In terms of CAPEX/Sales for the trailing 12 months, DTST’s 5.30% is 124.2% higher than the industry average of 2.37%. Furthermore, its trailing-12-month asset turnover ratio of 1.01 times is 62.7% higher than the industry average of 0.62 times.

DTST’s sales for the fiscal third quarter ending September 30, 2023 increased 35.5% year over year to $5.99 million. Its operating income amounted to $14.14 thousand, compared to an operating loss of $223.22 thousand in the prior-year quarter.

Its net income attributable to DTST stood at $179.01 thousand, compared to a net loss attributable to DTST of $245.62 thousand in the prior-year quarter. Its EPS was $0.02, compared to a loss per share of $0.04 in the prior-year quarter.

For the quarter ended December 31, 2023, DTST’s revenue is expected to increase 5.6% year over year to $6.30 million. Over the past year, the stock gained 98% to close the last trading session at $2.93.

DTST’s positive outlook is reflected in its POWR ratings. It has an overall rating of B, which is equivalent to a Buy in our proprietary rating system.

It has a B grade in Value and Sentiment. It is ranked number 8 in the same industry. Click here to see DTST’s additional ratings for growth, momentum, stability and quality.

Stock #1: Yelp Inc. (YELP)

YELP operates a platform that connects consumers with local businesses around the world. Provides free and paid advertising products to companies. The company offers other services, including YELP Guest Manager, the YELP Knowledge program, and YELP Fusion. Additionally, it provides content licenses and allows third-party data providers to update and manage business listing information on behalf of businesses.

In terms of trailing 12-month net income margin, YELP’s 7.05% is 119.4% higher than the industry average of 3.21%. Furthermore, its trailing 12-month return on common equity of 12.76% is 274.5% higher than the industry average of 3.41%. Furthermore, the stock’s trailing 12-month return on total assets of 8.95% is 622.1% higher than the industry average of 1.24%.

For the fiscal third quarter, which ended September 30, 2023, YELP’s net revenue increased 11.7% year over year to $345.12 million. Its adjusted EBITDA increased 30.5% year over year to $96.47 million. The company’s net income attributable to common shareholders increased 539.2% from the prior-year quarter to $58.22 million. Furthermore, its EPS was $0.79, which represents an increase of 507.7% year over year.

Additionally, its free cash flow increased 54.9% year over year to $99.16 million.

Street expects YELP’s earnings per share and revenue for the quarter ended December 31, 2023 to increase 17.5% and 10.4% year over year to $0.81 and $341.21 million, respectively. She surpassed the consensus per-share estimate in each of the following four quarters. Over the past year, the stock gained 69.6% to close the last trading session at $46.37.

It’s no surprise that YELP has an overall rating of A, which translates to a Strong Buy in our POWR ratings system.

It has an A rating for Quality and a B for Value. Ranks first in the Internet industry. In addition to the POWR ratings highlighted above, you can see YELP ratings for growth, momentum, stability, and quality here.

What to do next?

43-year-old investor veteran Steve Reitmeister just released his market outlook for 2024 along with his trading plan and his top 11 picks for next year.

Stock Market Outlook 2024 >


YELP stock was trading at $45.99 per share on Wednesday afternoon, down $0.38 (-0.82%). Year-to-date, YELP is down -2.85%, versus a -1.16% rise in the benchmark S&P 500 index over the same period.

About the author: Dipanjan Banchur

Since he was in primary school, Dipanjan was interested in the stock market. This led him to obtain a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a keen interest in reading and analyzing emerging trends in financial markets. Further…

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