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3 Internet Stocks for Momentum Investors Instead of Baidu
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As the Q2 earnings cycle draws to a close, Technology has emerged as one of the best performing sectors. Based on the quarterly results of 89.2% of the sector’s total market cap in the index that have been declared as of Aug 12, the industry has outperformed rather remarkably.
Total earnings of these companies have dipped 0.8% despite 3.1% higher revenues. Despite bleak year-over-year comparisons, a whopping 82% beat earnings estimates, while 72% exceeded top-line expectations, thanks to the better-than-expected results of sector giants like Facebook , Google’s parent Alphabet (GOOGL - Free Report) , Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) and Amazon (AMZN - Free Report) .
The sector’s strong quarterly performance wooed investors, resulting in the Technology Sector SPDR (XLK - Free Report) peaking to a 16-year high recently. Several market watchers believe that the sector may surge even higher backed by strong fundamentals, impressive earnings from the behemoths and prospects of a weaker dollar.
Internet stocks
As far as Internet stocks are concerned, we see that the biggest factor driving sales in this segment is growth in online spending worldwide. According to eMarketer, a market research firm, online purchases are likely to double reaching $3.551 trillion or 12.4% of total retail sales of $28.6 trillion as more people turn to online shopping.
Additionally, the smartphone markets in China, the U.S., India and Russia are likely to remain strong up to 2018, providing further impetus to Internet transactions. At the same time, new technological advancements are completely changing entertainment habits so we are increasingly looking to read books, watch TV (on-demand video) and play games online, which are also playing their role in the growth story of this segment. So naturally, investing in the internet space makes perfect sense at this point.
However, no matter how disciplined and systematic an investor you are, equity market volatility is a concern. Only a few lucky ones rake in the moolah, while others fall victim to ad hoc strategies.
So, wouldn’t it be a safer bet to invest in stocks that are winning currently and have the potential to gain further?
Here, we will discuss one tried and tested technique called Momentum Style Score, which enables us to zero-in on the right stocks at the right time.
What is Momentum Style Score?
The Momentum Style Score theory states that what has been going up so far is likely to continue to do so in the near future. This indicates the time to buy a stock that is likely to witness a share price rise. Nothing is more frustrating than watching a fundamentally sound or inexpensive stock remaining stagnant.
Momentum investors strongly believe in the saying “the trend is your friend,” which implies that stocks that are growing will continue to grow. They make short-term choices among stocks that are scaling up and sell them at the first sign of a downtrend. The basic idea is that once a trend is established, the stock will likely retain that direction and not move against the flow.
Thus, putting their bets on momentum stocks might help investors earn higher returns in the short term. Nevertheless, investors should remember that this is a speculative strategy and not meant for the faint hearted.
Finding the right momentum stocks is not easy due to market volatility, but if executed properly, momentum stocks can bring in hefty returns.
It is here that our new Style Score System can come in handy. The Zacks Momentum Style Score indicates the right time to grab a stock and make the most of its momentum. Back-tested results show that stocks with Style Score of ‘A’ or ‘B,’ when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) handily outperform others.
What to Avoid?
Baidu, Inc. (BIDU - Free Report) , formerly Baidu.com, Inc. is a Chinese-language Internet search provider based in Beijing. The company conducts its operations principally through Baidu Online Network Technology Co., Ltd., a network of third-party websites and software applications. Further, the company offers search services in Japanese, including web search, image search, video search, and blog search capabilities. It also offers online marketing services to its customers directly and through other distribution networks.
Although, Baidu’s increasing presence in the online video market is likely to improve its competitive position along with its strong dominance in the mobile search market and its consistent product development efforts, increased scrutiny into healthcare and related ads by regulatory authorities has led to a reduction or delay in spend by a large number of its medical customers. This will likely impact its sales in the coming quarters. Also, Baidu has reduced the number of sponsored links across its platform, which will definitely hurt its upcoming advertising revenues and impact total revenue.
Its current-year earnings per share (EPS) estimate has been revised downward to $3.59 from $4.32 over the past 30 days. The EPS growth estimate is a negative 36.0% for the current year, compared with the industry average of 21.8%. The stock currently carries a Zacks Rank #4 (Sell) and a Momentum Style Score of F indicating that the time is not ripe to enter a position in the stock.
What to Buy?
Here is a list of three best Internet stocks for momentum investors right now:
LinkedIn Corporation
LinkedIn Corporation is an online professional network, which allows members to create, manage, and share their professional identity online; build and engage with their professional network, access shared knowledge and insights, and find business opportunities. The current-year earnings per share (EPS) estimate has been revised upward to $1.01 from a meager 21 cents over the past 30 days.
The EPS growth estimate is 120.0% for the current year, compared with the industry average of 21.8%. The company gained 0.9% in the last one month and has a Zacks Rank #1 (Strong Buy) and a Momentum Style Score of B.
MeetMe, Inc.
MeetMe, Inc. owns and operates a social network. It enables users to meet new people through social games and apps, monetized by both advertising and virtual currency. The current-year earnings per share (EPS) estimate has been revised upward to 34 cents from 31 cents over the past 30 days. The EPS growth estimate is a whopping 300% for the current year, compared with the industry average of 21.8%. The company gained a hefty 216.5% in the last one year and has a Zacks Rank # 2 (Buy) coupled with a Momentum Style Score of A.
Limelight Networks, Inc.
Limelight is a content delivery partner, enabling the next wave of Internet business and entertainment. More than 1300 Internet, entertainment, software, and technology brands trust its robust, scalable platform to monetize their digital assets to deliver a brilliant online experience to a global audience. The EPS growth estimate stands at 71.4% for the current year, compared with the industry average of 21.8%. The company gained 8.5% value in the last one month and has a Zacks Rank # 2 (Buy) coupled with a Momentum Style Score of B.
If you are looking for top stocks with both strong fundamentals and favorable price trends, then you are looking for momentum stocks. We have identified some of the best out here with short term price potential in our Momentum Trader service.
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3 Internet Stocks for Momentum Investors Instead of Baidu
As the Q2 earnings cycle draws to a close, Technology has emerged as one of the best performing sectors. Based on the quarterly results of 89.2% of the sector’s total market cap in the index that have been declared as of Aug 12, the industry has outperformed rather remarkably.
Total earnings of these companies have dipped 0.8% despite 3.1% higher revenues. Despite bleak year-over-year comparisons, a whopping 82% beat earnings estimates, while 72% exceeded top-line expectations, thanks to the better-than-expected results of sector giants like Facebook , Google’s parent Alphabet (GOOGL - Free Report) , Apple (AAPL - Free Report) , Microsoft (MSFT - Free Report) and Amazon (AMZN - Free Report) .
The sector’s strong quarterly performance wooed investors, resulting in the Technology Sector SPDR (XLK - Free Report) peaking to a 16-year high recently. Several market watchers believe that the sector may surge even higher backed by strong fundamentals, impressive earnings from the behemoths and prospects of a weaker dollar.
Internet stocks
As far as Internet stocks are concerned, we see that the biggest factor driving sales in this segment is growth in online spending worldwide. According to eMarketer, a market research firm, online purchases are likely to double reaching $3.551 trillion or 12.4% of total retail sales of $28.6 trillion as more people turn to online shopping.
Additionally, the smartphone markets in China, the U.S., India and Russia are likely to remain strong up to 2018, providing further impetus to Internet transactions. At the same time, new technological advancements are completely changing entertainment habits so we are increasingly looking to read books, watch TV (on-demand video) and play games online, which are also playing their role in the growth story of this segment. So naturally, investing in the internet space makes perfect sense at this point.
However, no matter how disciplined and systematic an investor you are, equity market volatility is a concern. Only a few lucky ones rake in the moolah, while others fall victim to ad hoc strategies.
So, wouldn’t it be a safer bet to invest in stocks that are winning currently and have the potential to gain further?
Here, we will discuss one tried and tested technique called Momentum Style Score, which enables us to zero-in on the right stocks at the right time.
What is Momentum Style Score?
The Momentum Style Score theory states that what has been going up so far is likely to continue to do so in the near future. This indicates the time to buy a stock that is likely to witness a share price rise. Nothing is more frustrating than watching a fundamentally sound or inexpensive stock remaining stagnant.
Momentum investors strongly believe in the saying “the trend is your friend,” which implies that stocks that are growing will continue to grow. They make short-term choices among stocks that are scaling up and sell them at the first sign of a downtrend. The basic idea is that once a trend is established, the stock will likely retain that direction and not move against the flow.
Thus, putting their bets on momentum stocks might help investors earn higher returns in the short term. Nevertheless, investors should remember that this is a speculative strategy and not meant for the faint hearted.
Finding the right momentum stocks is not easy due to market volatility, but if executed properly, momentum stocks can bring in hefty returns.
It is here that our new Style Score System can come in handy. The Zacks Momentum Style Score indicates the right time to grab a stock and make the most of its momentum. Back-tested results show that stocks with Style Score of ‘A’ or ‘B,’ when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) handily outperform others.
What to Avoid?
Baidu, Inc. (BIDU - Free Report) , formerly Baidu.com, Inc. is a Chinese-language Internet search provider based in Beijing. The company conducts its operations principally through Baidu Online Network Technology Co., Ltd., a network of third-party websites and software applications. Further, the company offers search services in Japanese, including web search, image search, video search, and blog search capabilities. It also offers online marketing services to its customers directly and through other distribution networks.
Although, Baidu’s increasing presence in the online video market is likely to improve its competitive position along with its strong dominance in the mobile search market and its consistent product development efforts, increased scrutiny into healthcare and related ads by regulatory authorities has led to a reduction or delay in spend by a large number of its medical customers. This will likely impact its sales in the coming quarters. Also, Baidu has reduced the number of sponsored links across its platform, which will definitely hurt its upcoming advertising revenues and impact total revenue.
Its current-year earnings per share (EPS) estimate has been revised downward to $3.59 from $4.32 over the past 30 days. The EPS growth estimate is a negative 36.0% for the current year, compared with the industry average of 21.8%. The stock currently carries a Zacks Rank #4 (Sell) and a Momentum Style Score of F indicating that the time is not ripe to enter a position in the stock.
What to Buy?
Here is a list of three best Internet stocks for momentum investors right now:
LinkedIn Corporation
LinkedIn Corporation is an online professional network, which allows members to create, manage, and share their professional identity online; build and engage with their professional network, access shared knowledge and insights, and find business opportunities. The current-year earnings per share (EPS) estimate has been revised upward to $1.01 from a meager 21 cents over the past 30 days.
The EPS growth estimate is 120.0% for the current year, compared with the industry average of 21.8%. The company gained 0.9% in the last one month and has a Zacks Rank #1 (Strong Buy) and a Momentum Style Score of B.
MeetMe, Inc.
MeetMe, Inc. owns and operates a social network. It enables users to meet new people through social games and apps, monetized by both advertising and virtual currency. The current-year earnings per share (EPS) estimate has been revised upward to 34 cents from 31 cents over the past 30 days. The EPS growth estimate is a whopping 300% for the current year, compared with the industry average of 21.8%. The company gained a hefty 216.5% in the last one year and has a Zacks Rank # 2 (Buy) coupled with a Momentum Style Score of A.
Limelight Networks, Inc.
Limelight is a content delivery partner, enabling the next wave of Internet business and entertainment. More than 1300 Internet, entertainment, software, and technology brands trust its robust, scalable platform to monetize their digital assets to deliver a brilliant online experience to a global audience. The EPS growth estimate stands at 71.4% for the current year, compared with the industry average of 21.8%. The company gained 8.5% value in the last one month and has a Zacks Rank # 2 (Buy) coupled with a Momentum Style Score of B.
If you are looking for top stocks with both strong fundamentals and favorable price trends, then you are looking for momentum stocks. We have identified some of the best out here with short term price potential in our Momentum Trader service.