The internet is a crucial tool in today’s globalized world for quick access to information, communication with people around the globe, managing finances, online shopping, and entertainment. As per Statista, as of 2022, 91.8% of the total U.S. population accessed the internet, and this figure is projected to grow to 95% by 2027.
On top of it, despite economic uncertainties, 5G deployments are gaining traction. Amid the high availability of 5G compatible devices, the global 5G services market is expected to grow at a 25.3% CAGR by 2027.
Moreover, the internet service market was valued at $385.50 billion in 2021 and is expected to expand at a CAGR of 9.6% by 2031.
Given the growth potential of the industry, fundamentally strong internet stocks Yelp Inc. (YELP), trivago N.V. (TRVG), and Travelzoo (TZOO) might be solid buy-and-hold options as we head into 2023.
Yelp Inc. (YELP)
YELP operates a platform that connects consumers with local businesses in the United States and internationally. The company’s platform covers various regional business categories. It also offers free and paid advertising products to businesses.
YELP’s net revenue increased 14.8% year-over-year to $308.89 million for the third quarter that ended September 30. Its adjusted EBITDA came in at $73.94 million, up 4.6% year-over-year. Net income per share attributable to common stockholders for the same period came in at $0.13.
YELP expects fourth-quarter net revenue to be in the range of approximately $300-$310 million and the range of $1.185-$1.195 billion for the full year. The company expects adjusted EBITDA to be in the range of approximately $75-$85 million for the fourth quarter and $265-$275 million for the full year.
For the fiscal first quarter (ending March 2023), YELP’s EPS is estimated to come in at $0.59, up 336.8% year-over-year. Analysts expect YELP’s revenue to increase 10.4% year-over-year to $305.48 million for the same period. The company surpassed revenue estimates in each of the four trailing quarters, which is impressive.
YELP has lost marginally intraday to close its last trading session at $27.96.
YELP’s POWR Ratings reflect a promising outlook. The company has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It also has an A grade for Quality and Value. Within the Internet industry, YELP is ranked first among 60 stocks.
To see YELP’s ratings for Growth, Stability, Sentiment, and Momentum, click here.
trivago N.V. (TRVG)
Headquartered in Düsseldorf, Germany, TRVG operates a hotel and accommodation search platform globally. The company offers an online meta-search for hotels and accommodations through online travel agencies, hotel chains, and independent hotels.
On October 18, TRVG and AXS, a digital ticketing platform for live sports and entertainment, announced a global partnership to allow eventgoers to access affordable stay booking options with event ticket purchases made via AXS. The collaboration also makes TRVG the exclusive accommodation partner of AXS, which should be strategically beneficial.
For the fiscal third quarter ended September 30, TRVG’s total revenue increased 32.5% year-over-year to €183.70 million ($192.73 million). Cash, cash equivalents, and restricted cash at the end of the period improved by 19% from the prior-year period to €231.81 million ($243.21 million). Adjusted EBITDA rose 116.1% year-over-year to €33.50 million ($35.15 million).
Street expects TRVG’s EPS to increase 327.7% year-over-year to $0.24 for the fiscal year ending December 2022. Furthermore, revenue for the same period is expected to rise 38.5% from the prior-year period to $571.54 million. The company surpassed EPS estimates in each of the four trailing quarters.
It is up 3.1% over the past month to close its last trading session at $1.32.
This promising prospect is reflected in TRVG’s POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system.
TRVG has an A grade for Quality and a rated B for Growth and Value. In the same industry, it is ranked #2.
Click here for the additional POWR Ratings for Momentum, Stability, and Sentiment for TRVG.
Travelzoo (TZOO)
TZOO is an internet media company that provides travel, entertainment, and local deals from travel and entertainment companies and businesses in Asia Pacific, Europe, and North America.
TZOO’s revenues increased 1% year-over-year to $15.85 million in the fiscal third quarter ended September 30. Its gross profit rose 6.5% year-over-year to $13.53 million. Its non-GAAP operating income grew 3.1% year-over-year to $1.11 million. In addition, the company’s net income per share came in at $0.06.
The company expects substantially higher revenue and profitability in the fourth quarter. It expects travel to return to normal conditions. TRVG also believes it can keep fixed costs relatively low in the foreseeable future.
The consensus revenue estimate for the second quarter ending June 2023 of $21.19 million represents a 19.8% improvement year-over-year. Analysts expect TZOO’s EPS for the same quarter to increase 198.6% year-over-year to $0.25.
TZOO has gained marginally intraday to close its last trading session at $4.64.
It’s no surprise that TZOO has an overall rating of B, which translates to Buy in our proprietary rating system.
It also has an A grade for Quality and a B for Growth. Within the Internet industry, TZOO is ranked #3.
See TZOO’s ratings for Value, Stability, Sentiment, and Momentum here.
YELP shares were trading at $27.92 per share on Monday afternoon, down $0.04 (-0.14%). Year-to-date, YELP has declined -22.96%, versus a -15.72% rise in the benchmark S&P 500 index during the same period.
About the Author: Sristi Suman Jayaswal
The stock market dynamics sparked Sristi's interest during her school days, which led her to become a financial journalist. Investing in undervalued stocks with solid long-term growth prospects is her preferred strategy. Having earned a master's degree in Accounting and Finance, Sristi hopes to deepen her investment research experience and better guide investors.
3 Internet Stocks to Buy Now and Hold Into 2023 StockNews.com
