2 Buy-Rated Internet Stocks to Grab This Month
Amid the ongoing digitalization, more individuals and businesses rely on internet-based services. So, it could be wise to scoop up the shares of quality internet stocks such as J2 Global...
Amid the ongoing digitalization, more individuals and businesses rely on internet-based services. So, it could be wise to scoop up the shares of quality internet stocks such as J2 Global (JCOM) and Shutterstock (SSTK) as they are rated a ‘Buy’ in our proprietary POWR Ratings system.
The use of internet-based services was growing even before the COVID-19 pandemic, and the pandemic-driven remote lifestyle accelerated this growth. According to a DATAREPORTAL report, internet users are currently growing at a rate of 5.7% per annum, equating to an average of more than 700,000 new users each day.
Rapid advancements in the 5G space, increasing adoption of the internet of things (IoT), and the growing internet reach are expected to drive the growth of internet-based service providers. Moreover, the bipartisan infrastructure bill includes a $65 billion investment to improve broadband infrastructure, which should further drive the industry’s growth.
J2 Global, Inc. (JCOM)
Internet service provider JCOM operates through three segments: Fax and Martech; Voice, Backup, Security, Consumer Privacy and Protection; and Digital Media. In addition, it offers cloud services such as cloud fax services, endpoint and email security, and a SaaS platform for cybersecurity awareness and compliance training.
On October 5, 2021, JCOM announced the completion of its four acquisitions and a divestiture, including Solutelia, BigLinker, Diabetes Daily, and Arthur L. Davis Publishing Agency, Inc. This could lead to further growth of the company.
For the fiscal second quarter that ended June 30, 2021, JCOM’s net revenue increased 29.6% year-over-year to $429.04 million. Its operating income came in at $94.28 million, up 29.1% year-over-year. Its non-GAAP net income came in at $107.86 million, representing a 33.8% year-over-year rise. Also, its non-GAAP EPS increased 40.9% year-over-year to $2.41.
JCOM’s revenue is expected to come in at $1.75 billion in fiscal 2021, representing a 17.4% year-over-year rise. The company’s EPS is expected to increase 18.6% year-over-year to $9.7 in the current year. In addition, it surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 91.7% to close yesterday’s trading session at $135.98.
It’s no surprise that JCOM has an overall grade of B, which equates to a Buy rating in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
In addition, it has a B grade for Value and Quality. JCOM is ranked #6 out of 40 stocks in the Internet - Services industry. Click here to see additional grades for JCOM (Growth, Stability, Momentum, and Sentiment).
Note that JCOM is one of the few stocks handpicked currently in the Reitmeister Total Return portfolio. Learn more here.
Shutterstock, Inc. (SSTK)
SSTK is a content-based technology company that helps businesses worldwide license the photographs, vectors, illustrations, video, and music needed for their communications. The company’s brand portfolio includes Shutterstock, Bigstock, Shutterstock Editorial, Offset, and PremiumBeat.
On September 15, 2021, SSTK announced the launch of its new brand campaign and TV commercial, 100% Shutterstock. Rion Swartz, VP of Brand Marketing at SSTK, said, “Shutterstock is redefining what creativity means and how content creation happens. 100% Shutterstock is an important moment for the brand as we prove ourselves to be a cutting-edge creative partner for individuals and businesses of all sizes.”
SSTK’s revenue increased 19.3% year-over-year to $189.91 million for the second quarter that ended June 30, 2021. The company’s subscribers increased 43.9% year-over-year to 321,000. While its net income increased 55.1% year-over-year to $29.45 million, its EPS increased 49.1% to $0.79. Also, its adjusted EBITDA came in at $53.06 million, up 43.3% year-over-year.
Analysts expect SSTK’s revenue to be $752.44 million in fiscal 2021, representing a 12.9% year-over-year rise. The company’s EPS is expected to increase 17.6% year-over-year to $3.08 in the current year. It surpassed Street EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 111.4% to close yesterday’s trading session at $113.07.
SSTK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of B, which indicates a Buy rating in our proprietary ratings system.
SSTK has an A grade for Quality and a B grade for Sentiment. It is ranked #5 in the same industry. Click here to see additional grades for Growth, Value, Stability, and Momentum.
JCOM shares were trading at $138.22 per share on Wednesday afternoon, up $2.24 (+1.65%). Year-to-date, JCOM has gained 41.49%, versus a 17.23% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.