If one sector stands out as still having incredible growth potential for 2014 and beyond, it is the Internet and social media stocks. While 2013 was marked by surging performance for most Internet stocks, in 2014 investors have been much more discriminating of companies’ fundamentals and sensitive to valuation. That has kept a lid on prices, which could allow for some solid appreciation going forward.
A new report from the analysts at Wunderlich focuses on the top names that are adept at targeting the secular trends of mobile, local, analytics/data, marketplaces, and user-generated content as the companies that are most likely to expand their market cap over the rest of the year and into 2015. It also stresses that investors buy the stocks of the companies that are best positioned to capture mobile advertising and mobile commerce dollars.
With a very pricey market, and earnings season right around the corner, investors should tread carefully now. With that in mind, these top Internet and social media names should continue to remain fast growers over the years and could provide some nice lift to an aggressive, risk tolerant account.
Here are the top Internet and social media stocks to buy now at Wunderlich.
Angie’s List Inc. (NASDAQ: ANGI) stock got a rude awakening last month when Amazon.com announced it was planning to launch a local-services marketplace later this year. Starting with a single market, Amazon looks to test demand and logistics before rolling out nationwide. Angie’s List stock has held in well, and the company has a loyal following of subscribers. Wunderlich has a $15 price target. The Thomson/First Call estimate is much higher at $19.13. Shares closed trading Monday at $11.82 a share.
Groupon Inc. (NASDAQ: GRPN) may be the ultimate contrarian call as the stock is down a gigantic 50% this year. The company is expanding its in-store payments business with a new service that lets merchants identify customers with the company’s coupons and enable them to pay for purchases using an iPad mini. Merchants will pay Groupon a small monthly fee for the tablet and also a transaction charge. The introduction of the service follows more than a month of trials in five cities, where 98% to 99% of businesses approached decided to adopt the system.
If nothing else, Groupon’s stock may be a low price loss-leader, and perhaps a takeover candidate. The Wunderlich price target is $10, and consensus target is lower at $8.38. Groupon closed Monday at $6.45.
LinkedIn Corp. (NYSE: LNKD) is not an e-commerce powerhouse by any means, but it dominates the interconnecting of professionals. LinkedIn has more than 300 million members worldwide, with millions more being added every year, making it the most valuable social networking site for business to business marketing today. The LinkedIn price target from Wunderlich is a stunning $250. The consensus for this former momentum darling is up there as well at $223.08. Shares closed Monday at $169.25.