Jefferies Has 5 Big Internet Stocks to Buy for the Rest of 2014

The August numbers are in and numbers are supposed to never lie. Once again in e-commerce and overall dominance, the large cap Internet stocks continue to garner the lion’s share of the revenue, and they also continue to use their sheer size and capacity to stay way ahead of the competition in almost every metric.

A new report from the Internet team at Jefferies focuses primarily on August sales numbers and traffic, and it is very clear that the dominant Internet companies continue to get stronger. Despite the fact more than a few have stretched valuations, in some cases they have little competition in their specific silos.

Here are five top large Internet stocks to buy for the rest of 2014 and beyond, according to Jefferies. Inc. (NASDAQ: AMZN) continues to dominate Internet e-commerce as third-party sellers on its platform were up 45% year-over-year in August, the seventh month this year with sequential increases. In addition to incredible sales growth, the company’s Web Services division is considered the top player in the public cloud business. This division delivers a set of services that together form a reliable, scalable and inexpensive computing platform. Amazon also recently announced its CloudTrail security system, which is designed to work with all third-party reporting dashboards and alert systems. This helps to keep all stored data safe and secure.

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Combine Amazon’s huge retail backbone that dominates Internet sales with a host of additional new initiatives, and Jefferies and most of Wall Street agree the company is a top stock to own. The Jefferies price target for stock is a whopping $435. The Thomson/First Call consensus target is$389.97. The stock closed trading on Wednesday at $331.33 a share.

Facebook Inc. (NASDAQ: FB) crushed second-quarter earnings estimates and almost all of Wall Street ratcheted up price targets. With mobile revenue and advertising numbers skyrocketing, the company has been a stellar performer the past year. With over a billion registered users and growing fast around the world, Facebook’s e-commerce potential is significant and growing larger monthly, with seemingly low retailer penetration in terms of engaging with more advanced targeting methods such as Custom Audiences and “Lookalike” Audiences.

Numerous Wall Street analysts have pointed out that as more retailers become familiar and comfortable with these techniques, Facebook could see higher demand and pricing for these ad products. The Jefferies price target for the social media giant is $100, and the consensus target is $86.18. Facebook closed Wednesday at $77.43.

Google Inc. (NASDAQ: GOOG) is another mega cap tech name that the Jefferies analysts favor. They see newfound positive optionality in the company’s search business, and for the first time Google seems to be making inroads into its long-sought effort to extend its search dominance into vertical search, which focuses on specific segments of online content. Many Wall Street analysts also think that Google’s cloud product belongs in the second-tier of their business lines (like Play and Nexus), and may prove meaningful in the future by offering value chain synergies with the core business.

Add all this to YouTube, the innovation of driverless cars and the other growing project silos at Google and the unabated growth may continue for years. The Jefferies price target is $700. The consensus target is $673.57. Google closed Wednesday at $593.42.

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LinkedIn Corp. (NYSE: LNKD) continues to dominate the interconnecting of business professionals with more than 300 million members worldwide, making it the most valuable social networking site for business-to-business marketing today. The Jefferies analysts remain positive on the stock long-term, given the company’s large addressable markets, its well established business model, a still new but promising opportunity in sales and marketing solutions, and the stock’s relative, although much improved, underperformance.

Jefferies has a $300 price target on the stock, and the consensus target is set at $236.91. LinkedIn shares closed Wednesday at $231.

Yahoo! Inc. (NASDAQ: YHOO) is just a few short days away from one of the biggest payoffs and perhaps smartest investments in Internet history. The gigantic debut of Chinese internet giant Alibaba will mean a huge payday for Yahoo. While the company will be required to sell a 9% share of the 22.5% stake it holds in the mammoth deal, which is expected to generate a cash trove of $10 billion to $15 billion, depending on the final pricing, which could be as high as $75, the company will maintain a significant holding.

Most on Wall Street are expecting former Google executive and current CEO Marissa Mayer to buy back a large amount of Yahoo stock with some of the Alibaba proceeds. The Jefferies price target is set at $45, and the consensus on Wall Street is at $39.55. Shares closed above that Wednesday at $41.14.

The bottom line is that investors with an aggressive growth portfolios should stay with the Internet leaders. While the face of technology and the Internet will surely change in coming years, the sector leaders that already have the foothold and the cash to continue to expand and grow, should continue the dominance they currently enjoy.

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