April 15, 2024

Top 5 Internet-Focused Stocks for a Strong Portfolio in 2024 – January 15, 2024

The Internet software and services industry is gaining momentum due to heavy IT spending on solutions that support hybrid operating environments. Linkedin expects the global Internet of Things market size to reach more than $1.215 billion by 2030. Statista estimates end-user spending on public cloud/software as a service (SaaS) application services worldwide will reach around 232.3 billion dollars. Bloomberg predicts the global Metaverse revenue opportunity will approach $800 billion by 2024.

The level of technology adoption by businesses and the proliferation of connected consumer devices that could help people connect and do business online should also accelerate industry growth. The prominent penetration of mobile devices among users makes sense for companies to invest heavily in web-based infrastructure, applications and security software.

Within the Technology sector, the Zacks-defined Internet Software industry currently ranks in the top 14% of all industries with an annual return of 70.4%. The Internet software industry is benefiting from the continued demand for a global digital transformation. Growth prospects are attractive primarily due to the rapid adoption of SaaS, which offers flexible and cost-effective application delivery.

SaaS attempts to deliver applications to any user, anywhere, at any time and on any device. It has been effective in addressing customer expectations for seamless communications across multiple channels, including voice, chat, email, web, social media and mobile devices.

The growing need to secure cloud platforms amid rampant incidence of cyber attacks and hacking is driving the demand for web-based cybersecurity software. As enterprises continue to move their on-premises workload to cloud environments, application and infrastructure monitoring is gaining importance. This is a growing demand for web-based performance management monitoring tools.

Additionally, the pay-as-you-go model helps Internet software providers expand their offerings based on the needs of different users. The subscription-based business model ensures recurring revenue for industry participants.

At this stage, it will be prudent to invest in Internet software stocks with a favorable Zacks Rank to strengthen the portfolio.

Our best options

We’ve narrowed our search down to five internet software stocks with big potential for 2024. These stocks have seen positive earnings estimate revisions over the past 30 days. Each of our picks carries a Zacks Rank #1 (Strong Buy) or #2 (Buy). You can see The complete list of today’s Zacks #1 Rank stocks here.

The chart below shows the price performance of our five picks over the past year.

Meta Platforms Inc. (GOAL Free Report) is benefiting from steady user growth across all regions, particularly Asia Pacific. Increased participation in its products such as Instagram, WhatsApp, Messenger and Facebook has been a major growth driver. META is considered to have pioneered the concept of social networks.

However, as developed regions mature, Meta Platforms has taken steps to boost penetration in emerging markets in Southeast Asia, Latin America and Africa. Of all places, India deserves a special mention in terms of user growth. The second most populous country in the world offers enormous potential for META. With China off the radar, India can prove to be a fantastic growth engine for Meta.

Zacks Rank #2 Meta Platforms has an expected revenue and earnings growth rate of 13.5% and 22.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past seven days.

CrowdStrike Holdings Inc. (CRWD Free Report) is benefiting from the growing demand for cybersecurity solutions due to the large number of data breaches and the growing need for security and networking products amid the growing hybrid work trend. Continuous digital transformation and cloud migration strategies adopted by organizations are the main drivers of growth.

The strength of CRWD’s portfolio, primarily the 10 cloud modules of the Falcon platform, increases its competitive advantage and helps add users. Additionally, strategic acquisitions such as Humio and Preempt are expected to drive CRWD’s growth.

Zacks Rank #2 CrowdStrike has an expected revenue and earnings growth rate of 28.2% and 23.6%, respectively, for the current year (ending January 2025). The Zacks Consensus Estimate for current-year earnings has improved 0.3% over the past 30 days.

Pinterest Inc. (PAWS Free Report) is making solid progress in deepening user engagement on the platform. Focusing on improving operational rigor and integrating cutting-edge AI models will likely increase relevance and personalization. The corporate strategy of introducing more actionable content to the platform from a wide range of sources has resulted in healthy growth in engagement metrics across all regions.

PINS’ mobile deep linking product is helping retailers make more purchases through their mobile apps. PINS has significantly driven commercial ad revenue growth. Advanced tools like Travel Catalog and Premier Spotlight allow advertisers to reach target audiences with greater precision.

Zacks Rank #1 Pinterest has an expected revenue and earnings growth rate of 17.4% and 21.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.8% over the past seven days.

Monday.com Ltd. (MNDY Free Report) develops software applications in the United States, Europe, the Middle East, Africa, and internationally. MNDY provides Work OS, a cloud-based visual work operating system that consists of modular building blocks used and assembled to create software applications and work management tools.

MNDY also offers product solutions for work management, sales CRM, software development verticals, business development, pre-sales and customer success services. MNDY provides services to organizations, educational or government institutions and different business units of an organization.

Zacks Rank #1 monday.com has an expected revenue and earnings growth rate of 28.1% and 15.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.6% over the past 30 days.

Twilio Inc. (TWO Free Report) is benefiting from accelerated digital transformation amid a growing hybrid work trend. TWLO’s selective acquisitions and strategic investments in businesses and technologies are enhancing its product portfolio and strengthening its global presence.

TWLO is not only gaining momentum through strong expansion of its existing clientele, but is also aided by first-time deals with new customers, backed by its strong focus on product introduction and go-to-market sales strategy. We expect TWLO’s top line revenue to experience a CAGR of approximately 7.9% between 2023 and 2025.

Zacks Rank #2 Twilio has an expected revenue and earnings growth rate of 6.3% and 9.9%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 8.4% over the past seven days.

Zacks Names #1 Semiconductor Stock

It’s only 1/9000th the size of NVIDIA, which has skyrocketed over +800% since we recommended it. NVIDIA is still strong, but our new stock of high-end chips has much more room to grow.

With strong profit growth and an expanding customer base, it is positioned to meet the growing demand for Artificial Intelligence, Machine Learning and the Internet of Things. Global semiconductor manufacturing is projected to skyrocket from $452 billion in 2021 to $803 billion in 2028.

See this stock now for free >>

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