The pandemic catalyzed rapid change in the internet sector, with the rising integration of digital technologies across industries since then. Given the expected continuation of the internet industry’s momentum, investors could consider buying fundamentally strong internet stocks Tripadvisor, Inc. (TRIP), Opera Limited (OPRA), and Despegar.com, Corp. (DESP) trading under $20.
The internet industry remains well-poised for growth due to its indispensable role in the present day. Thanks to advancing mobile technology and the continuous modernization of previously less-developed regions, the number of internet users globally has risen in recent years, reaching 5.18 billion as of April 2023, amounting to 64.6% of the global population.
The growth of the internet industry is fuelled by the increased demand for virtual communication, e-commerce, streaming services, and the adoption of cloud infrastructure. With increased internet connectivity bringing a host of opportunities to organizations and industries through operational efficiency, the global Internet of Things (IoT) market is projected to grow at a CAGR of 26.1% to $3.35 trillion by 2030.
Given these factors, investors could consider buying the featured stocks. Let’s take a closer look at their fundamentals.
Tripadvisor, Inc. (TRIP)
TRIP operates as an online travel company that primarily provides travel guidance products and services worldwide. The company operates in three segments: Tripadvisor Core; Viator; and TheFork.
In terms of the trailing-12-month gross profit margin, TRIP’s 92.32% is 85.5% higher than the 49.76% industry average. Its 26.30% levered FCF margin is 257.8% higher than the 7.35% industry average. Likewise, its 0.63x trailing-12-month asset turnover ratio is 28.3% higher than the industry average of 0.49x.
For the fiscal quarter ended March 31, 2023, TRIP’s revenue increased 41.6% year-over-year to $371 million. The company’s total assets came in at $2.68 billion, compared to $2.57 billion for the period ended December 31, 2022. Its net cash from operating activities increased 57% year-over-year to $135 million.
TRIP’s EPS for the quarter ending September 30, 2023, is expected to increase 105.7% year-over-year to $0.58. Its revenue for the quarter ending June 30, 2023, is expected to increase 13.6% year-over-year to $473.61 million. Over the past month, the stock has gained 8.6% to close the last trading session at $16.62.
TRIP’s solid prospects are reflected in its POWR Ratings. It has an overall rating of B, which equates to a Buy. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
TRIP is ranked #7 out of 58 stocks in the Internet industry. In addition, it has an A grade for Quality and a B for Growth, Value, and Momentum.
To see the other TRIP ratings for Stability and Sentiment, click here.
Opera Limited (OPRA)
Headquartered in Oslo, Norway, OPRA provides mobile and PC web browsers. It operates in two segments, Browser and News; and Other.
In terms of trailing-12-month EBIT margin, OPRA’s 16.42% is 281.2% higher than the 4.31% industry average. Its 11.53% trailing-12-month net income margin is 484.3% higher than the 1.97% industry average. Likewise, its 4.35% trailing-12-month Return on Common Equity is 594.8% higher than the industry average of 0.63%
OPRA’s revenue for the first quarter ended March 31, 2023, increased 21.6% year-over-year to $87.05 million. Its adjusted EBITDA increased 195.8% year-over-year to $21.74 million. Additionally, its net EPS came in at $0.17, representing a 312.5% increase over the prior-year quarter.
OPRA’s revenue for the quarter ending June 30, 2023, is expected to increase 17.8% year-over-year to $91.66 million. Its EPS for the quarter ending September 30, 2023, is expected to increase 85% year-over-year to $0.19. Over the past year, the stock has gained 378.9% to close the last trading session at $18.18.
OPRA’s POWR Ratings reflect solid prospects. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. It is ranked #8 in the Internet industry. It has an A grade for Sentiment and a B for Growth and Quality.
In total, we rate OPRA on eight different levels. Beyond what we stated above, we have also given OPRA grades for Value, Momentum, and Stability. Click here to access all the ratings.
Despegar.com, Corp. (DESP)
Based in Buenos Aires, Argentina, DESP, an online travel company, provides a range of travel and travel-related products to leisure and corporate travelers through its websites and mobile applications in Latin America and the United States. The company operates in two segments, Travel Business, and Financial Services Business.
In terms of the trailing-12-month gross profit margin, DESP’s 67.25% is 91.1% higher than the 35.19% industry average. Its 13.91% trailing-12-month levered FCF margin is 285.2% higher than the 3.61% industry average.
For the fiscal first quarter ended March 31, 2023, DESP’s total revenue increased 41.2% year-over-year to $158.71 million. The company’s gross profit increased 54.1% year-over-year to $107.68 million. In addition, its total adjusted EBITDA increased 154.4% year-over-year to $17.30 million.
DESP’s revenue for the quarter ending June 30, 2023, is expected to increase 18.2% year-over-year to $158.85 million. Over the past six months, the stock has gained 49.6% to close the last trading session at $7.21.
DESP’s positive outlook is reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system. It is ranked #4 in the Internet industry.
The stock has a B grade for Growth, Value, and Momentum. Click here to see the additional ratings of DESP for Stability, Sentiment, and Quality.
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TRIP shares were trading at $16.50 per share on Thursday afternoon, down $0.12 (-0.72%). Year-to-date, TRIP has declined -8.23%, versus a 15.42% rise in the benchmark S&P 500 index during the same period.
About the Author: Malaika Alphonsus
Malaika's passion for writing and interest in financial markets led her to pursue a career in investment research. With a degree in Economics and Psychology, she intends to assist investors in making informed investment decisions.
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