The internet’s meteoric rise, fueled by governmental backing and global digitalization efforts, has sparked a revolution across industries. From e-commerce to entertainment and tourism, online activity is booming, presenting abundant growth opportunities.
As digital platforms become indispensable, robust Internet stocks Booking Holdings Inc. (BKNG), eBay Inc. (EBAY), Expedia Group, Inc. (EXPE), and Amazon.com, Inc. (AMZN) could be ideal buys for massive gains.
The growing use of the internet worldwide shows no signs of slowing down. With widespread internet usage, an increasing number of individuals are immersing themselves in online activities, resulting in the surge of e-commerce, social media networking, online banking and financial management, streaming services, remote work and collaboration tools, and more.
As of 2023, 79% of smartphone users had used their mobile devices for purchases. The global e-commerce market is estimated at $8.80 trillion, and projections suggest it will grow to $8.80 trillion by 2029 at a CAGR of 15.8%. Additionally, the U.S. online retail market is expected to surpass the trillion-dollar mark by 2029.
Additionally, government actions to expand internet accessibility bolster the industry. The BEAD program, under the federal Infrastructure Investment and Jobs Act (IIJA), dedicates over $42 billion to improve nationwide high-speed internet access.
On top of it, the internet travel industry is witnessing growth driven by traveler preferences for reliable transport, personalized service, and group travel, especially among youth. The sector is further propelled by the increasing influence of social media, rising demand for authentic experiences, and digital innovations.
The worldwide online travel booking services market is projected to grow at a CAGR of 9% until 2030.
With these favorable trends in mind, let’s delve into the fundamentals of the four Internet stock picks, beginning with the fourth choice.
Stock #4: Booking Holdings Inc. (BKNG)
BKNG is a global leader in travel and dining reservations, operating Booking.com, Rentalcars.com, and Priceline. With a market capitalization of $124.65 billion, it’s transforming the way we book accommodations, rental cars, and travel packages.
On March 13, BKNG, in collaboration with Peerspace, introduced an exclusive discount on hotels and rental cars for event organizers and attendees. This partnership enhances the event planning experience by offering discounted accommodations through Booking.com to customers booking venues on Peerspace.
The partnership simplifies event planning and travel arrangements by providing access to unique accommodations globally, ensuring a seamless experience for organizers and attendees alike.
On February 13. BKNG’s Priceline introduced AI-powered Trip Intelligence features in its Winter 2024 Product Release, enhancing the travel experience with over 30 new tools. For 25 years, Priceline has been a leader in online travel.
Leveraging cutting-edge technology, Priceline aims to streamline travel planning and booking, catering to evolving consumer demands for smarter, faster solutions.
Both developments should benefit BKNG by bolstering its reputation and attracting more customers.
Moreover, in February, BKNG declared a quarterly cash dividend of $8.75 per share, payable on March 28, 2024. The company pays an annual dividend of $8.75, which yields 0.96% on the current market price.
The company surpassed its consensus revenue and EPS estimates in the fiscal fourth quarter ended December 2023. In the fourth quarter, BKNG’s total revenues improved 18.2% year-over-year to $4.78 billion. Adjusted EBITDA rose 18% from the previous-year quarter to $1.46 billion.
For the same quarter, its non-GAAP net income and non-GAAP net income applicable to common stockholders per common share stood at $1.13 billion and $32, up 17.9% and 29.3% year-over-year, respectively.
Street expects BKNG’s revenue and EPS in the fiscal first quarter ending March 2024 to increase 12.4% and 22.5% year-over-year to $4.25 billion and $14.21, respectively. The company surpassed consensus revenue and EPS estimates in each of the trailing four quarters, which is notable.
The stock has gained 41.9% over the past year to close the last trading session at $3,647.81.
BKNG’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
BKNG has an A grade for Quality. Within the 52-stock Internet industry, it is ranked #5. The industry is rated a B.
Beyond what we’ve stated above, we have also rated the stock for Growth, Value, Sentiment, Momentum, and Stability. Get all ratings of BKNG here.
Stock #3: eBay Inc. (EBAY)
With a market cap of $26.94 billion, EBAY is a global hub for commerce. The company connects buyers and sellers worldwide through its online marketplace and mobile apps, enabling easy listing, buying, and selling of various products.
In the fiscal fourth quarter, EBAY opened its newest authentication center in Japan. The Tokyo-based hub provides an added layer of trust, enabling the company to authenticate luxury items on a global scale. The company also launched a new generative AI-powered social caption generator, making social sharing easier for sellers in the same quarter.
On February 27, EBAY celebrated the “Catch 151” auction, a one-day event on Pokémon Day offering ultra-rare cards and collectibles starting at $1.51.
EBAY has been a top destination for Pokémon inventory since 1996, with searches soaring in recent years, reflecting the enduring popularity of the franchise.
The company pays an annual dividend of $1.08, which yields 2.08% on the prevailing price level, higher than the four-year average dividend yield of 1.59%. The company has raised its dividend payouts at a CAGR of 48.8% over the past five years.
During the fiscal fourth quarter that ended December 31, 2023, EBAY exceeded its consensus revenue and EPS estimates. Its net revenues increased 2.1% year-over-year to $2.56 billion. Its gross profit rose 1.3% year-over-year to $1.80 billion. Also, its non-GAAP net income from continuing operations stood at $560 million and 1.07 per share.
EBAY’s EPS and revenue for the quarter ending March 2024, are forecasted to increase 8% and marginally year-over-year to $1.20 and $2.53 billion, respectively. It surpassed the consensus EPS and revenue estimate in each of the trailing four quarters.
Over the past month, the stock has gained 18.7% to close the last trading session at $52.
EBAY’s POWR Ratings reflect its rosy outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
It has an A grade for Quality and a B grade for Momentum. Within the same industry, it is ranked #19.
In addition to the POWR Ratings above, one can see EBAY’s Growth, Value, Stability, and Sentiment ratings here.
Stock #2: Expedia Group, Inc. (EXPE)
EXPE is a powerhouse in online travel and boasts popular brands like Expedia, Hotels.com, Vrbo, and Trivago. Its market capitalization stands at $18.59 billion.
On November 2, 2023, EXPE announced a new stock repurchase authorization of $5 billion, supplementing the company’s existing share repurchase authorization. In the fiscal year 2023, EXPE had repurchased over 19 million shares for a record $2 billion.
The company outperformed market expectations for both revenue and EPS in the fiscal fourth quarter ended December 31, 2023. EXPE generated revenues of $2.89 billion, up 10.3 year-over-year. Gross bookings were up 5.7% from the year-ago quarter to $21.67 billion. Its adjusted EBITDA grew 18.5% year-over-year to $532 million. Also, adjusted EPS increased 36.5% from the prior-year quarter to $1.72
EXPE’s revenue and EPS are expected to grow 9.3% and 27.8% year-over-year to $14.03 billion and $12.39, respectively, in the fiscal year 2024.
The stock rose 41% over the past year and 33.8% over the past six months to close the last trading session at $136.39.
EXPE’s POWR Ratings reflect this bright outlook. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
EXPE has an A grade for Quality and a B for Growth and Value. Within the same industry, it is ranked #8.
To access EXPE’s additional Momentum, Stability, and Sentiment ratings, click here.
Stock #1: Amazon.com, Inc. (AMZN)
AMZN dominates retail sales globally with a market cap of $1.85 trillion. Operating through three segments - North America, International, and Amazon Web Services (AWS) - it offers consumer products and subscriptions both online and in physical stores worldwide.
On March 18, Amazon’s AWS announced that it was partnering with NVIDIA Corp. (NVDA) to bring the latest NVIDIA Blackwell GPU platform to its services. This collaboration introduces the GB200 Grace Blackwell Superchip and B100 Tensor Core GPUs to AWS, enhancing its generative artificial intelligence (AI) capabilities.
By leveraging AWS’s advanced infrastructure and NVIDIA’s cutting-edge GPU technology, customers can now enjoy faster, scalable, and cost-effective solutions for real-time inference on large language models.
Moreover, on March 14, Blink, an AMZN company that delivers innovative and easy-to-use smart home security devices, unveiled the next-generation Blink Mini 2, a compact camera designed for both indoor and outdoor use with the new Blink Weather Resistant Power Adapter.
The Mini 2 offers improved image quality, a wider field of view, and a built-in LED spotlight for color night vision. Powered by Blink’s custom chip, it supports smart notifications, including person detection, with a separate subscription plan.
These partnerships and product advancements contribute to AMZN’s competitive edge in the rapidly growing internet sector.
AMZN successfully surpassed consensus EPS and revenue estimates during the fourth quarter that ended December 31, 2023. Its total net sales increased 13.9% year-over-year to $691.96 billion. The company’s operating income grew 382.6% from the year-ago value to $13.21 billion. In addition, the company’s net income and EPS came in at $10.62 billion and $1, up 3721.6% and 3233.3% from the prior year’s quarter, respectively.
Its total assets stood at $527.85 billion as of December 31, 2023, compared to $462.67 billion as of December 31, 2022.
The company anticipates net sales to range between $138 billion and $143.50 billion in the first quarter ending March 2024, representing an 8% to 13% growth compared to the first quarter of 2023. Operating income is projected to fall between $8 billion and $12 billion.
Analysts expect AMZN’s EPS and revenue to increase 173.1% and 11.9% year-over-year to $0.85 and $142.54 billion, respectively in the fiscal first quarter ending March 2024. Further, the company has topped the consensus revenue and EPS estimates in three of the four trailing quarters, which is remarkable.
The stock has soared 77.1% over the past year to close the last trading session at $178.15. Over the past six months, it gained 37.8%.
AMZN’s POWR Ratings reflect its positive prospects. The stock has an overall B rating, equating to Buy in our proprietary rating system.
The stock has an A grade for Growth and Sentiment and a B for Momentum and Quality. Within the same industry, it is ranked #5.
Click here to see additional POWR Ratings for Value and Stability for AMZN.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
AMZN shares were trading at $178.65 per share on Friday afternoon, up $0.50 (+0.28%). Year-to-date, AMZN has gained 17.58%, versus a 10.13% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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