Internet has been the lifeline amid the coronavirus outbreak. Undoubtedly, Internet stocks are benefiting from massive demand for cloud computing services, driven by the work-from-home, online learning and remote health diagnostic wave.
Cloud services are helping organizations remotely process a massive amount of information, build and run crucial applications, and enable employees to collaborate from anywhere across the globe.
Moreover, the ongoing work-from-home and online learning trend amid the rising fear of a second coronavirus wave is anticipated to keep demand for remote-working tech and cybersecurity solutions high.
Further, transition to SaaS-based (or Software as a Service) applications boosts demand for cloud infrastructure monitoring, web-based application performance management and human capital management solutions. This, in turn, enhances the prospects of Internet-based companies.
Additionally, increasing allegiance to online gaming, music and video streaming services are also acting as tailwinds. For instance, streaming giant Netflix (NFLX - Free Report) added 15.77 million paid subscribers globally, which surged 64.3% year over year in first-quarter 2020, thanks to coronavirus-led lockdowns and shelter-in-home guidelines.
Meanwhile, changing consumer preference and behavior has provided a significant boost to Internet-based services like e-commerce, contactless payment and delivery.
Markedly, according to an eMarketer report, the e-commerce market is expected to grow 18% this year to $709.78 billion, accounting for 14.5% of total U.S. retail sales. Consumers are rapidly embracing online mode to order household essentials. Food and beverage at 58.5% and health/personal care/beauty at 32.4% are the two fastest growing e-commerce categories, per eMarketer.
The optimism surrounding Internet stocks is reflected in the robust performance of Invesco NASDAQ Internet ETF (PNQI) on a year-to-date basis, which has rallied 24.9% against the SPDR S&P 500 ETF’s (SPY) decline of 5.5%.
Here we discuss five Internet stocks that are up more than 100% year to date and have room for further growth.
Moreover, they have a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Zoom Video Communications (ZM - Free Report) is riding on the coronavirus-induced work-from-home and online-learning trend. Moreover, the company’s efforts to eliminate the security and privacy loopholes like “zoombombing” are expected to help maintain its existing enterprise user base as well as attract more customers.
Zoom Video currently flaunts a Zacks Rank of 1. The Zacks Consensus Estimate for its fiscal 2021 earnings is pegged at $1.18 per share, having been raised 174.4% in the past 60 days. Shares of the company have returned 276.1% year to date.
Zscaler (ZS - Free Report) benefits from steady rise in demand for cloud security as the work-from-anywhere trend gains momentum. Notably, this Zacks #1 Ranked company’s unique offerings include four architectural advantages that firewalls cannot add. These include Edge cloud for policy enforcement, multi-tenancy, proxy for SSL or TLS inspection and zero trust network access.
Zscaler shares have returned 132.8% year to date. The Zacks Consensus Estimate for its 2020 earnings is pegged at 17 cents per share, having been revised 13.3% upward in the past 60 days.
Wayfair’s (W - Free Report) shares have returned 122.1% year to date. The company has been witnessing strong acceleration in new and repeat customer orders. Also, an expanding active customer base and strength in the company's direct retail business are positives.
Moreover, this Zacks Rank #1 company is aggressively investing in international regions in order to bolster presence and expand in-house-brand offerings.
The Zacks Consensus Estimate for its 2020 bottom line is pegged at a loss of $4.23 per share, having narrowed from a loss of $8.79 in the past 60 days.
Datadog (DDOG - Free Report) has shown strong resiliency amid the coronavirus outbreak. It has gained from exposure to gaming, food delivery, e-commerce and streaming sectors that actually benefited from the pandemic-led lockdowns and shelter-in-home guidelines. The cloud-based monitoring and analytics platform provider has raised its 2020 guidance on solid demand for its solutions. Shares of the company have returned 134.2% year to date.
Datadog carries a Zacks Rank #2. The consensus mark for its 2020 earnings is pegged at 3 cents per share, up from a loss of 6 cents in the past 60 days.
Fastly (FSLY - Free Report) shares have returned a whopping 279% year to date. The CDN provider is riding on work from home as well as increased web and Internet video traffic. Moreover, growing demand for Edge Computing security solutions is a tailwind for this Zacks Rank #2 company.
Fastly’s focus on large enterprise customers also makes it immune to recessionary threats face by sectors like retail and travel & tourism as well as small and medium businesses.
The consensus mark for its 2020 loss has improved from 42 cents to 22 cents per share in the past 60 days.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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