RBC Has 5 Red-Hot Internet Stocks to Buy for 2016

Technology

Published: December 18, 2015 8:45 am

Last Updated: January 13, 2020 3:57 pm

Overall, 2015 has been a very lousy year for investors. With the indexes struggling just to break even, the only true performance generated was from the mega-cap technology Internet companies. In fact the FANG stocks, or Facebook, Amazon, Netflix and Google, rose an average of 81% in 2015. The real question given the big rise in the stocks is where are the compelling values for 2016?

A new RBC research report says that this coming year could very well be the year of the BAGEL stocks, or Alibaba, Amazon, Google (Alphabet), Expedia and LinkedIn. The RBC team feels they can not only be the dominate forces in 2016, but also show a more reasonable valuation level. With mobile soaring, it’s a new ball game.

Here are the five BAGEL stocks for 2016. They are ranked from one to five in order of preference at RBC.

Alphabet

The technology giant is the top pick at RBC for 2016. Alphabet Inc. (NASDAQ: GOOGL) recently introduced Android Pay, a revamped photos and a lightweight Android derivative operating system called Brillo, which is designed to power the Internet of Things. The company also recently announced a new mobile version for the Android OS, which was released this fall.

Google remains the undisputed leader in Internet search, and when you add in a diverse portfolio that includes everything from the Android platform to YouTube, from Google Wallet for automatic pay to the Google Flights tool, continued growth is not out of the question. YouTube watch time accelerated a massive 60% year over year and the average view session was up 50% to 40 minutes, the best growth in two years.

RBC lauds the upcoming catalysts and point out that the company showed consistent revenue growth and margin stabilization, and it finally gave cash back in the form of a $5.1 billion stock buyback. Last, but certainly not least, the company remains one of the best overall portfolio plays that focuses on the biggest Internet trends: the mobile/multi-screen shift, wearable devices, video, the Internet of Things and much more. Alphabet delivers investors the full package.

The RBC price target for the stock is monster $880. The Thomson/First Call consensus price target is $848.07. The stock closed trading on Thursday at $769.83.