4 Soaring Internet Stocks to Consider Buying This Summer

The global internet services industry is growing rapidly due to its unprecedented innovations and increasing demand. Given the adoption of hybrid working structures and increasing tech integration across major industries, we think internet stocks Alphabet (GOOGL), Facebook (FB), J2 Global (JCOM), and Shutterstock (SSTK) should deliver stellar gains in the near term. Read on.

The Internet is expected to play a major role in the global economic recovery and growth thereafter, given the rapid tech integration in almost  every industry. Furthermore, the advent of 5G technology is expected to boost the industry even more with much higher connectivity speed.

A continuation of  remote education and work, even as the COVID-19 pandemic abates, are increasing the amount of time spent by people on internet activities. Because organizations are expected to continue with remote working arrangements  due to benefits it offers, such as high productivity and employee satisfaction, the internet industry is expected to witness a steady  and growing demand for the foreseeable future. Indeed, the global internet services market is expected to grow at a 12.2% CAGR  to hit  $492.15 billion by 2025.

Considering the industry’s growth prospects, we believe top performing companies Alphabet Inc. (GOOGL), Facebook, Inc. (FB), J2 Global, Inc. (JCOM), and Shutterstock, Inc. (SSTK) should deliver significant returns in the coming months.

Alphabet Inc. (GOOGL)

GOOGL is one of the world’s biggest technology companies and is ranked #9 in the Fortune 500 list. It operates through three segments--Google Services, Google Cloud, and Other Bets.

On May 4, GOOGL signed a 10-year agreement with AES Corporation. Under the agreement, AES will supply  electricity to power GOOGL's data centers  with 24/7 carbon free energy. This agreement demonstrates GOOGL’s commitment to sustainable growth. The  company aims to operate on 100% carbon free energy by 2030.

GOOGL’s revenues increased 34.4% year-over-year to $55.31 billion in its  fiscal first quarter, ended March 31. Its income from operations grew 106.1% from its  year-ago value to $16.44 billion, while its net income improved 162.3% year-over-year to $17.93 billion. The company’s has EPS increased 166.4% year-over-year to $26.29.

Analysts expect GOOGL’s revenues to increase 46.3% year-over-year to $56.02 billion in its  fiscal second quarter, ending June 2021. A $19.21 consensus EPS estimate for the current  quarter indicates an 89.6% rise from the same period last year. Also,  GOOGL surpassed the Street’s EPS estimates in each of the trailing four quarters.

Shares of GOOGL have gained 70% over the past year. GOOGL has gained 41.3% over the past six months to close yesterday’s trading session at $2,450.17.

It is no surprise that GOOGL has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

The stock also has an A grade for Sentiment, and a B grade for Quality. Among the 71 stocks in the Internet industry, GOOGL is ranked #2. To see additional GOOGL Ratings for Growth, Value, Stability, and Momentum, click here.

Facebook, Inc. (FB)

FB develops products that enable people to connect with friends and family over a global network. The company’s product line includes some of the most widely used apps, including Facebook, Instagram, Messenger, WhatsApp and Oculus.

FB’s total revenues increased 48% year-over-year to $26.17 billion in its fiscal first quarter, ended March 31. Its income from operations grew 93% from its  year-ago value to $11.38 billion, while its net income improved 94% year-over-year to $9.50 billion. The company’s EPS increased 93% year-over-year to $3.30.

The Street expects FB’s revenues to increase 59.9% year-over-year to $27.82 billion in the current quarter, ending June 30, 2021. A $3.02  consensus EPS estimate for the current  quarter indicates a 67.8% rise from the same period last year. FB has an impressive earnings surprise history also. It beat the consensus EPS estimates in each of the trailing four quarters. Shares of FB have gained 44.8% over the past year, and 25% year-to-date.

FB has an overall B rating, which equates to Buy in our proprietary POWR Ratings system. The stock has an A for Quality, and a B for Sentiment. Among the 71 stocks in the Internet industry, FB is ranked #6. To see more of FB’s component grades, click here.

J2 Global, Inc. (JCOM)

JCOM is a leading Internet information and services company. The Los Angeles-based company operates through two segments: Cloud Services and Digital Media. JCOM’s revenues have increased each year  over the past 25 years.

On June 2, JCOM announced its plan to redeem its convertible senior notes due 2029 in August. This should reduce the company’s  interest rate burden significantly.

On April 19, JCOM announced its plan to split its operations into two independent publicly traded companies--J2 Global and Consensus--by the third quarter of 2021. This will  include a spin-off of at least 80.1% of the outstanding shares of Consensus common stock to JCOM shareholders.

JCOM’s total revenues increased 19.8% year-over-year to $398.2 million in its  fiscal first quarter, ended March 31. Its operating income grew 42.1% from its  year-ago value to $78.5 million, while its non-GAAP net income improved 43.9% year-over-year to $97.2 million. The company’s non-GAAP EPS has increased 55.8% year-over-year to $2.18.

Analysts expect JCOM’s revenues to increase 24.8% year-over-year to $394.56 million in the current quarter, ending June 30, 2021. A $2.03 consensus EPS estimate  for the current quarter represents  a 18.7% increase  from the same period last year. JCOM also surpassed the Street’s EPS estimates in each of the trailing four quarters. Shares of JCOM have gained 98% over the past year, and 41.9% year-to-date.

JCOM has an overall A rating, which equates to Strong Buy in our proprietary POWR Ratings system. The stock also has a B grade for Growth, Value, and Quality. Among the 43 stocks in the Internet - Services industry, JCOM is ranked #1. For the rest of JCOM’s grades (Sentiment, Stability, and Momentum), click here.

Recently the Reitmeister Total Return Portfolio (RTR) closed a winning trade in JCOM for a 42% gain. Learn more about the RTR service here.

Shutterstock, Inc. (SSTK)

SSTK is a global technology company, providing content, tools and services. The company, which is based in New York City, is a marketplace for licensed imagery that  helps businesses access  photos, vectors, illustrations, video and music that they need for their communications.

On April 22, SSTK announced its integration with Google Drive for Enterprise, a cloud-based file storage solution for businesses. With this integration, SSTK aims to provide an enhanced content and service experience to its customers. In the past couple of months, SSTK partnered with a few established businesses to improve its offerings and strengthen its position in the market.

SSTK’s revenue increased 14% year-over-year to $183.28 million in its  fiscal first quarter, ended March 31. Its net income stood at $29.51 million, up 584% from the same period last year. Its operating income grew 559% from its  year-ago value to $38.12 million. The company’s EPS has increased 558.3% year-over-year to $0.79.

A $179.45 million consensus revenue estimate for the fiscal second quarter (ending June 2021) indicates a 12.7% increase year-over-year. The Street expects the company’s EPS to rise 12.9% from the prior year quarter to $0.70 in the current quarter. Also,  SSTK surpassed the Street’s EPS estimates in each of the trailing four quarters. SSTK has gained 195.4% over the past year and 43.4% year-to-date.

SSTK has an overall B rating of B, which equates to Buy in our proprietary POWR Ratings system. SSTK also has a B grade  for Sentiment and Quality. It is ranked #2 in the Internet-Services industry. Click here to view additional SSTK Ratings for Momentum, Value, Growth, and Stability

GOOGL shares were trading at $2,436.35 per share on Monday afternoon, down $13.82 (-0.56%). Year-to-date, GOOGL has gained 39.01%, versus a 14.89% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics.

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