The internet profoundly impacts almost every aspect of our lives as new technologies and applications emerge, shaping how we work, communicate, learn, and shop. Given this backdrop, investors could consider buying fundamentally sound internet stocks Angi Inc. (ANGI), 8x8, Inc. (EGHT), and 1stdibs.Com, Inc. (DIBS) this month.
With the adoption of cloud-based products and services, the growing use of high-speed 5G networks, the rising popularity of e-commerce, and the increasing trend of remote work and online learning, the internet industry’s prospects appear promising.
According to Statista, there were approximately 5.35 billion internet users globally as of January 2024, amounting to 66.2% of the global population. Around 5.04 billion, or 6.3% of the world’s population, were social media users.
Moreover, the rising internet penetration and smartphone use support the growth of the e-commerce sector. Consumers are now more reliant on digital devices than ever, and it is expected that mobile will inch closer to becoming consumers' preferred channel for online shopping in the upcoming years.
The e-commerce market is expected to reach $18.81 trillion by 2029, growing at a CAGR of 15.8% during the forecast period (2024-2029).
The Software as a Service (SaaS) industry is also witnessing significant growth, driven by the rapid adoption of public and hybrid cloud-based solutions among small and mid-size businesses, larger enterprises, and government agencies. The global SaaS market is projected to total $1.23 trillion by 2032, exhibiting a CAGR of 18.4% from 2024 to 2032.
Moreover, investors’ interest in internet stocks is evident from the Invesco NASDAQ Internet ETF’s (PNQI) 37.5% gains over the past year.
Considering these encouraging trends, let’s take a look at the fundamentals of the three best Internet industry stocks mentioned below.
Angi Inc. (ANGI)
ANGI connects home service professionals with consumers internationally. The company operates through three segments: Ads and Leads; Services; and International. It provides consumers with tools and resources to help them find local, pre-screened, and customer-rated service professionals. It also connects consumers with service professionals for local services.
ANGI’s trailing-12-month gross profit margin of 95.43% is 93% higher than the industry average of 49.44%. Also, the stock’s trailing-12-month asset turnover ratio of 0.72x is 49.5% higher than the industry average of 0.48x.
In terms of forward EV/Sales, ANGI is trading at 0.97x, 45.8% lower than the industry average of 1.80x. Likewise, its forward Price/Sales multiple of 0.81 is 30.6% lower than the industry average of 1.17.
For the fiscal fourth quarter that ended December 31, 2023, ANGI reported revenue of $300.43 million. The company’s operating income came in at $7.63 million, compared to an operating loss of $28.20 million in the previous-year quarter. Its adjusted EBITDA increased 96.2% year-over-year to $41.40 million.
Furthermore, as of December 31, 2023, the company’s cash and cash equivalents stood at $364.04 million, compared to $321.16 million as of December 31, 2022.
Analysts expect ANGI’s revenue for the fiscal year (ending December 2025) to increase 6% year-over-year to $1.32 billion. Street expects the company to report an EPS of $0.06 for the same period. Moreover, ANGI has surpassed consensus EPS estimates in three of the trailing four quarters, which is impressive.
ANGI’s stock has soared 17.8% over the past six months to close the last trading session at $2.05.
ANGI’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.
The stock has a B grade for Value and Sentiment. It is ranked #13 in the 54-stock B-rated Internet industry.
Beyond what is stated above, we’ve also rated ANGI for Quality, Growth, Stability, and Momentum. Get all ANGI ratings here.
8x8, Inc. (EGHT)
EGHT provides voice, video, chat, contact center, and enterprise-class application programmable interface (API) Software-as-a-Service solutions for small and mid-size businesses, mid-market and larger enterprises, government agencies, and other organizations worldwide.
On April 16, 2024, EGHT announced 8x8 Operator Connect for Microsoft Teams, a purpose-built solution offering native Public Switched Telephone Network (PSTN) calling in Microsoft Teams through the Operator Connect program.
The new solution adds an Operator Connect option powered by 8x8’s leading Global ReachTM network to offer reliable calling, streamlined deployment, and simplified management to enhance admin efficiency for Microsoft Teams Phone customers. Operator Connect for Microsoft Teams will launch flexible calling plans and support local presence in around 20 nations.
On February 29, EGHT announced the availability of 8x8 Engage, an AI-powered, tailored solution that enables cross-organization customer engagement for enhanced customer experiences, fostering loyalty and driving business success. This new launch is expected to extend the company’s market reach and drive sales.
EGHT’s trailing-12-month gross profit margin of 69.59% is 42.2% higher than the industry average of 48,95%. Also, the stock’s trailing-12-month levered FCF margin of 13.88% is 50.9% higher than the industry average of 9.20%. Its asset turnover ratio of 0.88x is 44.7% higher than the industry average of 0.61x.
During the fiscal 2024 third quarter that ended December 31, 2023, EGHT reported a total revenue of $181.01 million. Its non-GAAP operating profit grew 32.4% year-over-year to $24.26 million. Also, its non-GAAP net income increased 78.5% from the year-ago value to $14.76 million, and its non-GAAP net income per share grew by 71.4% year-over-year to $0.12.
The consensus EPS estimate of $0.45 for the fiscal year (ended March 2024) indicates an improvement of 37.3% year-over-year. Analysts expect EGHT’s revenue for the fiscal year (ending March 2025) to increase marginally year-over-year to $733.21 million.
Shares of EGHT have plunged 14.7% over the past six months to close the last trading session at $2.15.
EGHT’s POWR Ratings reflect its bright prospects. The stock has an overall rating of B, which equates to Buy in our proprietary rating system.
EGHT has an A grade for Growth and Value. It is ranked #4 out of 28 stocks in the Internet - Services industry.
In addition to the POWR Ratings highlighted above, one can access EGHT’s ratings for Momentum, Sentiment, Quality, and Stability here.
1stdibs.Com, Inc. (DIBS)
DIBS operates an online marketplace for luxury design products worldwide. The company’s marketplace connects customers with sellers and makers of vintage, antique, and contemporary furniture and home décor, jewelry, watches, art, and fashion products.
DIBS’ forward EV/Sales of 1x is 14.2% lower than the 1.16x industry average. Likewise, the stock’s trailing-12-month Price/Book of 1.58x is 21.9% lower than the industry average of 2.02x.
In the fourth quarter that ended December 31, 2023, DIBS reported net revenue of $20.92 million. Its gross margin was 71.5%, compared to 70.5% in the fourth quarter of 2022. Also, the company’s cash, cash equivalents and short-term investments amounted to $139.30 million as of December 31, 2023.
Per the guidance for the first quarter of 2024, DIBS expects gross merchandise value (GMV) to range between $83 million and $90 million. Also, the company’s net revenue is expected to be between $20.60 million and $21.90 million for the quarter.
Analysts expect DIBS’ revenue for the fiscal year ending December 2024 to increase 1.3% year-over-year to $85.75 million. Additionally, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is remarkable.
Shares of DIBS have surged 42.7% over the past six months to close the last trading session at $5.31.
DIBS’ strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
DIBS has a B grade for Sentiment, Growth, Momentum, and Quality. It is ranked #14 out of 54 stocks in the B-rated Internet industry.
Click here to access the additional DIBS ratings (Value and Stability).
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ANGI shares fell $0.06 (-2.93%) in premarket trading Friday. Year-to-date, ANGI has declined -20.08%, versus a 5.41% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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