April 18, 2024

Three Internet Stocks to Secure January 2024

As industries around the world undergo digital transformation, integrating Internet-based solutions to improve efficiency, communication and customer engagement, the Internet industry is experiencing significant momentum.

Against this backdrop, investors could buy quality internet stocks Expedia Group, Inc. (EXPE), Dingdong (Cayman) Limited (DDL) and Similarweb Ltd. (SMWB) this month.

Globally, the Internet is reshaping communication, organization, and information sharing, having a significant impact on people and economies. Last year, approximately 5.3 billion people, representing about two-thirds of the world’s population, were connected to the Internet, underscoring its ubiquitous role in daily life.

Furthermore, the Internet services market in the United States has experienced significant growth in recent years, driven by the rise of digitalization, the growth of e-commerce, and the emergence of new technologies.

Additionally, according to Forbes, the concept of the “Immersive Internet” marks the next evolution of online experiences this year, transcending traditional web content with the incorporation of technologies such as augmented reality (AR) and virtual reality (VR).

Furthermore, ongoing technological advances such as the development of high-speed broadband, 5G networks and improved infrastructure are contributing to the expansion of Internet services. The growth of the global Internet services industry is also driven by a combination of technological advancements, increased digitalization in various sectors, and growing demand for various online activities and services.

The global internet services market is projected to reach a revised size of $916.5 billion by 2030, growing at a compounded rate of 8.2%.

Furthermore, the increasing global accessibility of Internet services has paved the way for increased demand for Internet bandwidth. This increase is driven by the expansion of cloud-based applications and the growing popularity of audio and video streaming and video-on-demand services.

With these auspicious trends in mind, let’s take a look at the fundamentals of the three Internet stocks.

Expedia Group, Inc. (EXPE)

EXPE is a global player in online travel, offering various travel services and accommodations through popular brands such as Expedia, Hotels.com, Vrbo and Trivago. It offers tourists and business travelers benefits such as loyalty programs and advertising services.

EXPE’s trailing 12-month gross profit margin of 86.91% is 145.7% higher than the industry average of 35.38%. Its trailing-12-month leveraged FCF margin of 16.73% is 218.5% higher than the industry average of 5.25%.

On November 2, 2023, EXPE announced a new $5 billion share repurchase authorization, complementing the company’s existing share repurchase authorization.

In the third quarter ended September 30, 2023, EXPE’s revenue was $3.93 billion, an increase of 8.6 year-over-year. Gross bookings increased 7.1% from the prior-year quarter to $25.69 billion. Its adjusted EBITDA grew 12.7% year over year to $1.22 billion. Additionally, adjusted EPS increased 33.6% from the prior-year quarter to $5.41.

EXPE’s revenue and EPS are expected to grow 10% and 42.4% year-over-year to $12.83 billion and $9.67, respectively, in the fiscal year ending December 2023.

The stock rose 65.4% over the past year and 46.8% over the past three months to close the last trading session at $144.99.

EXPE’s POWR Ratings reflect this promising outlook. The stock has an overall rating of B, which is equivalent to a Buy in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, each of which is weighted to an optimal degree.

EXPE has an A rating for Quality and a B for Value. Within the B-rated Internet industry, it is ranked 17 out of 55 stocks.

Click here for additional EXPE Growth, Momentum, Stability, and Sentiment ratings.

Dingdong (Cayman) Limited (DDL)

Headquartered in Shanghai, China, DDL is an e-commerce company that operates as an on-demand e-commerce company. The company offers vegetables, fresh produce, fruits, seafood, meats and eggs. It also offers ready-to-eat, ready-to-cook and ready-to-heat products, as well as dairy and bakery products. DDL operates as an autonomous online retail business, primarily through Dingdong Fresh.

DDL’s trailing 12-month asset turnover ratio of 2.46 times is 194.5% higher than the industry average of 0.84 times.

In the fiscal third quarter, which ended September 30, DDL’s total revenue amounted to RMB 5.14 billion (722.48 million). Its non-GAAP net income amounted to RMB 15.51 million ($2.18 million), compared to a loss of RMB 285.17 million ($40.08 million) in the prior-year quarter. Additionally, its non-GAAP net income per share stood at RMB0.04, compared to a loss of RMB0.89 in the prior-year quarter.

The Street expects DDL’s revenue to be $3.09 billion for the year ending December 2024, up 9.8% year-over-year. Its EPS is expected to grow 334.4% year-over-year to $0.15 for the same year.

The stock gained 1.4% intraday to close the last trading session at $1.50.

DDL’s strong fundamentals are reflected in its POWR Ratings. The stock 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 Growth. It is ranked number 11 in the Internet industry.

To view additional DDL Sentiment, Momentum, Stability, and Quality Ratings, click here.

Similarweb Ltd. (SMWB)

Headquartered in Givatayim, Israel, SMWB provides a platform for digital intelligence in the United States, Europe, Asia Pacific, the United Kingdom, Israel, and internationally. It offers digital research intelligence solutions that enable senior leaders, strategy, business intelligence and consumer insights teams to benchmark performance against competitors and market leaders.

SMWB’s trailing 12-month gross profit of 76.93% is 56.6% higher than the industry average of 49.14%. Its trailing-12-month asset turnover ratio of 0.90x is 46.4% higher than the industry average of 0.62x.

On December 11, 2023, SMWB announced the launch of the 2024 Marketing Benchmark Report, a free resource for digital marketers to understand the competitive landscape and improve their performance.

The report, developed in collaboration with HypeAuditor, focuses on seven US industries and highlights the growing importance of influencer marketing as a critical force in shaping brand narratives and connecting with audiences.

During the fiscal third quarter ending September 30, 2023, SMWB’s number of customers grew 12% year-over-year to 4,371. As a result, its revenue increased 9.6% year-over-year to $54.83 million. Dollars. Non-GAAP gross profit amounted to $45.58 million, up 19.6% from the same quarter last year. The company reported non-GAAP operating income of $1.07 million, compared to a loss of $13.35 million in the prior-year quarter.

In the fiscal fourth quarter ending December 2023, the company anticipates total revenue in the range of $55.50 million to $56 million, reflecting year-over-year growth of approximately 9% at the midpoint. Non-GAAP operating profit is estimated to be between $0.50 million and $1 million. The company also aims to achieve sustained positive free cash flow in the fourth quarter.

For the fiscal year ending December 2023, analysts expect SMWB’s EPS to increase 92.3% year-over-year. Its revenue is likely to increase by 12.3% year-over-year to $216.97 million in the same year. Additionally, the company surpassed consensus EPS estimates in each of the trailing four quarters, which is notable.

Over the past month, the stock rose 8.3% to close the last trading session at $5.33.

It’s no surprise that SMWB has an overall rating of B, which equates to Buy in our proprietary rating system.

It has an A grade in Sentiment and a B in Growth. Within the Internet Services industry of 28 stocks, it is ranked #3.

In addition to the POWR ratings above, SMWB ratings for Value, Momentum, Quality, and Stability can be accessed here.

What to do next?

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EXPE stock was trading at $146.85 per share on Thursday morning, up $1.86 (+1.28%). Year-to-date, EXPE has declined -3.25%, versus a -1.05% increase in the benchmark S&P 500 index over the same period.

About the author: Kritika Sarmah

Her interest in risk instruments and her passion for writing turned Kritika into a financial analyst and journalist. She earned her bachelor’s degree in business and is currently pursuing the CFA program. With her fundamental approach, her goal is to help investors identify untapped investment opportunities. Further…

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