The importance of the internet skyrocketed since the global pandemic hit the world, forcing most of the population to move online for all day-to-day activities. According to an EarthWeb report, globally, 4.95 billion people will use the internet daily in 2022, up 6.2% year-over-year.
As human dependency on the Web has proliferated over the last 30 years, the Web, too, has undergone a seismic transformation during this period, with the next stage of evolution being Web 3.0.
Social media and the growing emergence of e-commerce have acted as catalysts for increased internet users worldwide. About 4.62 billion people around the globe now use social media, which comes to about 58.4% of the total global population, and 424 million new users have come online in the last 12 months.
Given this backdrop, we think it could be wise to invest in fundamentally sound internet stocks Yelp Inc. (YELP), Perion Network Ltd. (PERI), and Opera Limited (OPRA), which are currently trading at discounts to their peers.
Yelp Inc. (YELP)
YELP operates a platform connecting consumers with local businesses in the United States and internationally. The company's platform covers various local business categories, including restaurants, shopping, beauty and fitness, health, and other categories, as well as home, local, auto, professional, pets, events, real estate, and financial services.
In terms of forward non-GAAP P/E, YELP is currently trading at 11.23x, 34.2% lower than the 13.78x industry average. Also, in terms of its forward EV/Sales, the stock is currently trading at 1.56x, 19.6% lower than the 1.94x industry average.
During the first quarter ending March 31, 2022, total revenues increased 19.2% year-over-year to $276.63 million. Its adjusted EBITDA grew 10% from its year-ago value to $48.09 million. The company’s loss per share has narrowed 87.5% from its prior-year quarter to $0.01.
Analysts expect YELP's revenue to increase 11.3% year-over-year to $286.25 million for the second quarter ending June 2022. The consensus EPS estimate of $0.78 represents a 25.3% improvement year-over-year for the third quarter ending September 2022.
Moreover, it has an impressive earnings surprise history, as it surpassed the consensus EPS estimates in three of the trailing four quarters.
YELP's POWR Ratings reflect this promising outlook. The company has an overall rating of A, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
The stock also has an A grade for Value and Quality and a B grade for Growth. Within the F-rated Internet industry, it is ranked #1 of 65 stocks.
To see additional POWR Ratings for Sentiment, Stability, and Momentum for YELP, click here.
Perion Network Ltd. (PERI)
Headquartered in Holon, Israel, PERI provides digital advertising solutions to brands, agencies, and publishers in North America, Europe, and internationally. It provides Wildfire, a content monetization platform; search monetization solutions, including website monetization, search mediation, and app monetization; and cross-channel digital advertising software as a service platform.
In April, PERI announced that its search advertising business unit, CodeFuel, had been named Microsoft Advertising’s 2021 Global Supply Partner of the Year. CodeFuel has been selected as the Global Supply Partner from the Microsoft Advertising regional winners, all of them distinguished and effective partners across the Americas, EMEA, and APAC.
The company is one among the only five companies globally that have reached the position of a global partner, each in its area of proficiency.
In terms of forward non-GAAP P/E, PERI is currently trading at 17.06x, 37.1% lower than the 17.06x industry average. Also, in terms of its forward EV/Sales, the stock is currently trading at 0.80x, 58.9% lower than the 1.94x industry average.
In the first quarter ending March 31, 2022, PERI's total revenue increased 40% year-over-year to $125.30 million. The company’s income from operations grew 327.3% from its year-ago value to $16.51 million, while its Non-GAAP net income improved 196% from its prior-year quarter to $20.70 million. The company's Non-GAAP EPS rose 132% from its previous period to $0.44.
The consensus EPS estimate of $0.30 for the second quarter ending June 2022 represents a 57.9% year-over-year growth. Analysts expect PERI's revenue to increase 33.4% year-over-year to $146.34 million for the second quarter ending June 2022. The company’s shares have surged 3.6% over the past nine months.
PERI's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system. The stock has an A grade for Value and Sentiment and a B for Growth. In the D-rated Internet - Services industry, it is ranked #1 of 31 stocks.
In total, we rate PERI on eight different levels. Beyond what we've stated above, we have also given PERI grades for Quality, Stability, and Momentum. Get all the PERI ratings here.
Opera Limited (OPRA)
OPRA provides mobile and PC web browsers. It has two operational segments, Browser and News, and Other. The company offers mobile browser products, such as Opera Mini, Opera for Android and iOS, Opera GX Mobile, and Opera Touch; PC browsers, including Opera for Computers and Opera GX; and Opera News, an AI-powered personalized news discovery and aggregation service.
Last month, OPRA became the first major browser to offer a free, unlimited, no-log built-in browser VPN service. OPRA is now augmenting its security features with the new VPN Pro subscription service, a premium device-wide VPN that can also be used without installing a separate application. The new VPN Pro service is available for OPRA for Android users.
Also, last month, OPRA announced the successful integration of BNB Chain in its Crypto Browser. BNB Chain is the largest smart contract blockchain in terms of daily active users (DAU) and hosts a plethora of community-driven and decentralized applications (dApps).
The integration will enable users to buy the BNB token with fiat, send and receive it using the built-in Opera crypto wallet, and access dApps on the BNB Chain.
In terms of forward EV/Sales, OPRA is currently trading at 1.06x, 62.3% lower than the 2.82x industry average. Also, in terms of its forward Price/Sales, the stock is currently trading at 1.65x, 41% lower than the 2.80x industry average.
OPRA’s revenue increased 38.8% year-over-year to $71.58 million for the first quarter ending March 31, 2022. Its operating profit came in at $1.34 million compared to an operating loss of $1.46 million in the previous period, while its adjusted EBITDA grew 60.6% from its year-ago value to $7.35 million.
The $0.25 consensus EPS estimate represents 397.6% year-over-year growth for fiscal 2022. The revenue estimate of $71.78 million for the second quarter ending June 2022 represents a 19.3% year-over-year growth.
It is no surprise that OPRA has an overall B rating, which equates to Buy in our POWR Ratings system. OPRA has an A grade for Value and a B for Sentiment. Within the Internet industry, it is ranked #5.
Click here to see the additional POWR Ratings for OPRA (Momentum, Stability, Quality, and Growth).
YELP shares were trading at $28.47 per share on Wednesday afternoon, down $0.11 (-0.38%). Year-to-date, YELP has declined -21.44%, versus a -19.33% rise in the benchmark S&P 500 index during the same period.
About the Author: Spandan Khandelwal
Spandan's is a financial journalist and investment analyst focused on the stock market. With her ability to interpret financial data, she aims to help investors evaluate the fundamentals of a company before investing.
3 Undervalued Internet Stocks to Grab Before They Move Higher StockNews.com
