Driven by government support and global digitalization efforts, the rapid rise of the Internet has sparked a revolution across industries. From e-commerce to entertainment and travel, online activities are booming, bringing abundant growth opportunities.
As digital platforms become indispensable, powerful internet stocks Booking Holdings Inc. (BKNG), eBay Inc. (EBAY), Expedia Group, Inc. (EXPE) and Amazon.com, Inc. (AMZN) may be the ones to gain An ideal buy for huge gains.
Internet usage continues to grow around the world and shows no signs of slowing down. With the widespread use of the Internet, more and more people are immersed in online activities, leading to a surge in e-commerce, social media networks, online banking and financial management, streaming services, remote working and collaboration tools, and more.
As of 2023, 79% of smartphone users use mobile devices to make purchases. The global e-commerce market is estimated at US$8.80 trillion and is expected to grow at a CAGR of 15.8% to US$8.80 trillion by 2029. In addition, the U.S. online retail market is expected to exceed the trillion-dollar mark by 2029.
In addition, government actions to expand internet access have also boosted the industry’s growth. BEAD plans to invest more than $42 billion under the federal Infrastructure Investment and Jobs Act (IIJA) to improve high-speed Internet access nationwide.
On top of that, the internet travel industry is experiencing growth, driven by travelers’ (especially young people’s) preference for reliable transportation, personalized service, and group travel. The growing influence of social media, growing demand for authentic experiences and digital innovation have further fueled the industry’s growth.
It is expected that the global online travel booking service market will grow at a compound annual growth rate of 9% by 2030.
With these favorable trends in mind, let’s delve into the fundamentals of four Internet stock picks, starting with the fourth option.
Stock #4: Booking Holdings Inc. (ikB)
BKNG is a global leader in travel and dining bookings, operating Booking.com, Rentalcars.com and Priceline. With a market capitalization of $124.65 billion, it is changing the way we book accommodation, rental cars and travel packages.
On March 13, BKNG partnered with Peerspace to launch exclusive hotel and car rental discounts for event organizers and attendees. The partnership enhances the event planning experience by offering discounted stays through Booking.com to customers who book venues with Peerspace.
The partnership simplifies event planning and travel arrangements by offering unique accommodations around the world, ensuring a seamless experience for organizers and attendees.
On February 13, BKNG’s Priceline introduced artificial intelligence-driven travel intelligence capabilities in its 2024 winter product launch, enhancing the travel experience with more than 30 new tools. Priceline has been a leader in online travel for 25 years.
Priceline leverages cutting-edge technology to simplify travel planning and booking, meeting consumers’ evolving needs for smarter, faster solutions.
Both developments will benefit BKNG, enhance its reputation and attract more customers.
Additionally, BKNG announced a quarterly cash dividend of $8.75 per share in February, payable on March 28, 2024. The company pays an annual dividend of $8.75, giving it a dividend yield of 0.96% based on current market prices.
The company beat consensus revenue and earnings per share estimates in its fiscal fourth quarter ended December 2023. In the fourth quarter, BKNG’s total revenue increased 18.2% year-on-year to $4.78 billion. Adjusted EBITDA increased 18% from the same period last year to $1.46 billion.
In the same quarter, its non-GAAP net profit and non-GAAP net profit per common share applicable to common shareholders were US$1.13 billion and US$32 respectively, a year-on-year increase of 17.9% and 29.3% respectively.
Street expects BKNG’s revenue and earnings per share to increase 12.4% and 22.5% year-over-year, respectively, to $4.25 billion and $14.21 in the first fiscal quarter ending in March 2024. The company has topped consensus revenue and EPS estimates in each of the last four quarters, which is noteworthy.
The stock has gained 41.9% in the last year, closing at $3,647.81 on its last trading day.
BKNG’s POWR rating reflects its promising outlook. The stock has an overall rating of B, which equates to “Buy” in our proprietary ratings system. POWR ratings are calculated by considering 118 different factors, each weighted to the optimal degree.
The quality grade of BKNG is A. Ranked 5th among 52 Internet industry stocks. The industry rating is B grade.
In addition to what we’ve said above, we also rate stocks for growth, value, sentiment, momentum, and stability. Get all of BKNG’s ratings here.
Stock #3: eBay Inc. (eBay)
EBAY has a market capitalization of US$26.94 billion and is a global business center. The company connects buyers and sellers around the world through its online marketplace and mobile apps to easily list, buy and sell a variety of products.
During its fiscal fourth quarter, EBAY opened its newest certification center in Japan. The center in Tokyo provides an additional layer of trust, allowing the company to authenticate luxury goods globally. The company also launched a new AI-powered social caption generator to make social sharing easier for sellers during the same quarter.
On February 27, EBAY celebrated the “Catch 151” auction, a one-day event held on Pokémon Day that offered ultra-rare cards and collectibles starting at $1.51.
EBAY has been the premier destination for Pokémon inventory since 1996, with searches soaring in recent years, reflecting the series’ enduring popularity.
The company pays an annual dividend of $1.08, giving it a dividend yield of 2.08% at current price levels, which is higher than the four-year average dividend yield of 1.59%. The company’s dividend payments have grown at a CAGR of 48.8% over the past five years.
In its fiscal fourth quarter ended December 31, 2023, EBAY beat its consensus revenue and earnings per share estimates. Its net income increased 2.1% year over year to $2.56 billion. Its gross profit increased 1.3% year-on-year to $1.8 billion. Additionally, its non-GAAP net income from continuing operations was $560 million, or $1.07 per share.
For the quarter ending in March 2024, EBAY’s earnings per share and revenue are expected to increase slightly 8% year over year, to $1.20 and $2.53 billion, respectively. It has topped consensus EPS and revenue estimates in each of the last four quarters.
The stock has gained 18.7% over the past month, closing at $52 on the last trading day.
EBAY’s POWR rating reflects its positive outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary ratings system.
Its quality grade is A and its power grade is B. Ranked 19th in the industry.
In addition to POWR’s ratings above, you can also view EBAY’s Growth, Value, Stability, and Sentiment ratings here.
Stock #2: Expedia Group, Inc. (experimental experiment)
EXPE is a giant in online travel, owning popular brands such as Expedia, Hotels.com, Vrbo and Trivago. Its market capitalization is $18.59 billion.
On November 2, 2023, EXPE announced that it had obtained $5 billion in new stock repurchase authorization, which supplemented the company’s existing stock repurchase authorization. In fiscal 2023, EXPE repurchased more than 19 million shares for a record $2 billion.
The company’s revenue and earnings per share for its fiscal fourth quarter ended December 31, 2023, both beat market expectations. EXPE’s revenue was US$2.89 billion, a year-on-year increase of 10.3%. Total bookings increased 5.7% from the same period last year to US$21.67 billion. Its adjusted EBITDA increased 18.5% year-over-year to $532 million.Additionally, adjusted earnings per share increased 36.5% year over year to $1.72
EXPE’s revenue and earnings per share in fiscal 2024 are expected to increase by 9.3% and 27.8% year-on-year, reaching US$14.03 billion and US$12.39 respectively.
The stock has gained 41% in the last year and 33.8% in the past six months, closing at $136.39 on its last trading day.
EXPE’s POWR rating reflects this bright outlook. The stock has an overall rating of B, which equates to a Buy in our proprietary ratings system.
EXPE has an A quality grade and a B growth and value grade. Ranked eighth in the industry.
To access other momentum, stability and sentiment ratings for EXPE, click here.
Stock #1: Amazon.com Inc (Amazon)
AMZN dominates the global retail industry with a market capitalization of US$1.85 trillion. The company operates through three segments: North America, International and Amazon Web Services (AWS), providing consumer products and subscription services online and in stores around the world.
On March 18, Amazon AWS announced a partnership with NVIDIA Corporation (NVDA) to introduce the latest NVIDIA Blackwell GPU platform to its services. The collaboration introduces the GB200 Grace Blackwell Superchip and B100 Tensor Core GPU to AWS, enhancing its capabilities for generating artificial intelligence (AI).
By leveraging AWS’s advanced infrastructure and NVIDIA’s cutting-edge GPU technology, customers can now enjoy faster, scalable, and cost-effective real-time inference solutions for large language models.
Additionally, on March 14, Blink, an AMZN company that provides innovative and easy-to-use smart home security devices, launched the next generation Blink Mini 2, a compact camera designed for indoor and outdoor use that features the new Blink Weather Resistant power adapter.
Mini 2 offers improved image quality, a wider field of view, and a built-in LED spotlight for color night vision. It’s powered by Blink’s custom chip, supports smart notifications including people detection, and has a separate subscription plan.
These partnerships and product advancements help Amazon’s competitive advantage in the fast-growing Internet space.
Amazon managed to beat consensus EPS and revenue estimates for its fourth quarter ended December 31, 2023. Its total net sales increased 13.9% year-over-year to $691.96 billion. The company’s operating income increased by 382.6% compared with the same period last year, reaching US$13.21 billion. In addition, the company’s net profit and earnings per share were US$10.62 billion and US$1 respectively, an increase of 3721.6% and 3233.3% respectively from the same period last year.
As of December 31, 2023, its total assets were US$527.85 billion, while as of December 31, 2022, its total assets were US$462.67 billion.
The company expects net sales for the first quarter ending March 2024 to be between $138 billion and $143.5 billion, an increase of 8% to 13% compared with the first quarter of 2023. Operating income is expected to fall between $8 billion and $12 billion.
Analysts expect Amazon’s earnings per share and revenue in the first fiscal quarter ending in March 2024 to increase 173.1% and 11.9% year-on-year, respectively, to $0.85 and $142.54 billion. Additionally, the company beat consensus revenue and EPS estimates in all three quarters. To be four quarters behind is pretty remarkable.
The stock has surged 77.1% in the past year, closing at $178.15 in the last trading day. It’s up 37.8% over the past six months.
AMZN’s POWR rating reflects its positive outlook. The stock has an overall rating of B, which is equivalent to a Buy in our proprietary ratings system.
The stock has an A for Growth and Sentiment and a B for Momentum and Quality. Ranked fifth in the industry.
Click here to see other POWR ratings for AMZN’s value and stability.
What’s next?
Steve Reitmeister, a 43-year investing veteran, has just released his 2024 market outlook along with a trading plan and 11 top picks for the year ahead.
2024 Stock Market Outlook >
AMZN shares were trading at $178.65 per share on Friday afternoon, up $0.50 (+0.28%). Year to date, AMZN is up 17.58%, while the benchmark S&P 500 index has gained 10.13% during the same period.
About the author: Kritika Sarma
Kritika’s interest in risk tools and passion for writing led her to become an analyst and financial journalist. She earned a bachelor’s degree in business and is currently pursuing the CFA program. Her goal is to help investors discover untapped investment opportunities through her fundamental approach. more…