Internet stocks are benefiting from rapid adoption of cloud computing and IoT, proliferation of e-commerce, growing clout of social-media platforms, and expanding online delivery services.
Notably, improving speed courtesy 4G Volte technology and increasing allegiance to online gaming, music and video streaming services have been favoring growth prospects. Moreover, accelerated deployment of 5G, which is likely to improve Internet speed, remains a key catalyst.
Additionally, Internet penetration in emerging markets, including Latin America, Africa and South East Asia, is on the rise, which presents significant growth opportunities. Per the latest update provided by InternetWorldStats, global Internet penetration came in at 56.8% at the end of March, 2019.
The optimism surrounding Internet stocks can be substantiated by robust year-to-date performance.
Notably, the Invesco NASDAQ Internet ETF (PNQI) and First Trust Dow Jones Internet ETF (FDN) returned 28.2% and 26.4%, respectively, on a year-to-date basis compared with the S&P 500’s rally of 19.7%.
Making the Right Choice
The aforementioned factors are expected to help Internet stocks gain in the second half of 2019. However, stock picking is a difficult task and it is here that the Zacks Style Score System can come in handy.
Back-tested results show that stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) when combined with VGM Style Scores of A or B handily outperform other stocks.
6 Key Picks
We have zeroed in on six Internet stocks that have the favorable combination. Each of the stocks has outperformed the S&P 500 year to date.
Year to Date Price Performance
Asure Software ASUR has a VGM Score of A and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here.
The company is benefiting from rapid adoption of its SaaS solutions that help manage mobile workforces and global workspaces. The company’s expanding clientele includes the likes of Staples Canada, Lowenstein Sandler, Inotek, among others.
The company has pulled off an average positive earnings surprise of 29.5% in the trailing four quarters.
The Zacks Consensus Estimate for 2019 has moved north by 13.7% to 58 cents over the past 60 days.
j2 Global JCOM is gaining from robust performance of its cloud services and the digital media business segments. The company’s efforts to strengthen its speedtest intelligence service and an expanding subscriber base for Humble Bundle are noteworthy.
This Zacks Rank #1 stock has a VGM Score of B and an average four-quarter positive earnings surprise of 4.4%.
Notably, over the past 60 days, the Zacks Consensus Estimate for 2019 has moved upward by almost 4% to $7.05.
Digital Turbine APPS is well positioned to capitalize on increasing advertiser demand and incremental adoption of innovative offerings, including SingleTap, Notifications and Folders.
This Zacks Rank #2 has a VGM Score of A and an average four-quarter positive earnings surprise of 87.5%.
The Zacks Consensus Estimate for fiscal 2020 earnings of 13 cents has been revised a penny upward in the past 60 days.
Alteryx AYX is riding on robust adoption of its self-service data analytics software platform. Expanding international footprint and improving penetration in select verticals, including public sector and healthcare domains are key growth drivers.
Currently, Alteryx has a Zacks Rank #2 and a VGM Score of B. The company has an average positive earnings surprise of a whopping 119.6% over the trailing four quarters.
The Zacks Consensus Estimate for current year has remained steady at 43 cents over the past 60 days.
JD.com JD is benefiting from internationally expanding e-commerce business, improving logistics services and supply chain management system. Further, strength in its retail-as-a-service strategy and growing number of flagship stores of international brands are helping it to enhance product offerings, which is bolstering adoption.
This Zacks Rank #2 stock has a VGM Score of B. The company has pulled off an average positive earnings surprise of 105.1% in the trailing four quarters.
Notably, over the past 60 days, the Zacks Consensus Estimate for 2019 has moved upward by 21.4% to 68 cents.
HubSpot HUBS provides inbound marketing and sales application over the cloud. Robust performance of Hubspot One and Hubspot CRM tools; and an expanding international footprint remain tailwinds.
This Zacks Rank #2 stock has a VGM Score of B. The company has an average positive earnings surprise of almost 80% in the trailing four quarters.
The 2019 consensus earnings estimate has moved up by a penny to $1.29 over the past 30 days.
(We are reissuing this article to correct a mistake. The original article, issued on July 5, 2019, should no longer be relied upon.)
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JD.com, Inc. (JD) : Free Stock Analysis Report
j2 Global, Inc. (JCOM) : Free Stock Analysis Report
Digital Turbine, Inc. (APPS) : Free Stock Analysis Report
HubSpot, Inc. (HUBS) : Free Stock Analysis Report
Asure Software Inc (ASUR) : Free Stock Analysis Report
Alteryx, Inc. (AYX) : Free Stock Analysis Report
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