The digital revolution of enterprises in almost all global industries is driving huge growth in the Internet industry. Given recent industry headwinds, investors may want to consider buying fundamentally sound Internet stock Chegg, Inc.CHGG), trivago NV (TRVG), and Travelzoo (TZOO), with attractive ratings.
The increased availability of computers, the global modernization of nations, and the increased use of smartphones have made Internet access more frequent and convenient for people. The integration of the Internet into everyday life through various devices and services has increased its use, benefiting the industry. From 2024, global Internet users reached 5.35 billionwhich equates to 66.2% of the total world population.
Additionally, the growing demand for adaptive learning substitutes due to busy lifestyles and comprehensive use of digital technologies in education due to improvements in internet infrastructure and mobile devices, are driving the expansion of the e-learning market. Looking ahead, IMARC Group expects the market to reach $278.30 billion by 2032, exhibiting a CAGR of 9.3%.
Moreover, rising living standards and purchasing power are driving people to plan at least one trip a year, and they are finding it much easier to navigate online travel booking. Therefore, the global online travel market is expected to register a CAGR of 14.8% until 2031.
Additionally, investor interest in Internet stocks is evident from the Invesco NASDAQ Internet ETF (PNQI) 35.5% returns over the past year. The growth is evident in the growing demand for digital platforms for various uses.
With these encouraging trends in mind, let’s take a look at the basics of all three the best Page industry stocks, starting with the third choice.
Stock #3: Chegg, Inc.CHGG)
CHGG operates a direct-to-student learning platform that helps students build essential life and work skills to accelerate their way through learning programs in the United States and internationally.
In terms of EV/EBITDA, CHGG is trading at 3.45x, 65.6% lower than the industry average of 10.04x. Its forward Price/Sales multiple of 0.57 is 34.6% lower than the industry average of 0.88. Likewise, the stock’s forward EV/Sales of 0.92x is 23.9% lower than the industry average of 1.21x.
CHGG’s net income for the fiscal first quarter ended March 31, 2024, totaled $174.35 million. The company’s non-GAAP gross profit was $131.51 million. Its non-GAAP net income and net earnings per share came in at $29.59 million and $0.26, respectively. Additionally, as of March 31, 2024, the company’s total liabilities were $769.17 million, compared to $782.62 million as of December 31, 2023.
For the quarter ending December 31, 2024, CHGG’s EPS is expected to grow 4.4% year-over-year to $1.08. Its revenue for fiscal year 2025 is expected to be $652.04 million. Additionally, the company beat consensus revenue estimates in each of the trailing four quarters, which is impressive.
Shares of CHGG plunged 30.9% over the month to close the last trading session at $3.62.
CHGGs POWR Ratings reflect this strong point of view. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. POWR ratings are calculated by considering 118 different factors, with each factor weighted on an optimal scale.
The stock has an A for value and a B for growth and quality. It is ranked 19th in the B ranking with 51 shares Page industry.
Beyond what was said above, we also rated CHGG for Momentum, Stability and Sentiment. Get all CHGG ratings here.
Stock #2: trivago NV (TRVG)
Headquartered in Düsseldorf, Germany, TRVG, together with its subsidiaries, operates a hotel and accommodation search platform in the United States, Germany, the United Kingdom and internationally. It provides an online meta-search for hotels and accommodations through online travel agencies, hotel chains, and independent hotels.
In terms of forward price/book, TRVG is trading at 1.17x, 42.6% lower than the industry average of 2.03x. Its forward Price/Sales multiple of 0.31 is 75% lower than the industry average of 1.23. Likewise, the stock’s forward EV/Sales of 0.14x is 92.4% lower than the industry average of 1.87x.
During the first quarter, which ended on March 31, 2024, TRVG’s total revenue reached 101.43 million euros ($110.41 million). Other total net income reached 841 thousand euros ($915.48 thousand), increasing 5.1% year over year. Moreover, its net cash provided by investing activities increased 479.7% from the previous year’s value to 24.64 million euros ($26.82 million).
Analysts expect TRVG’s revenue for the year (ending December 2025) to grow 7.2% year-over-year to $555.75 million. For the same year, the company’s revenue is expected to be $0.09.
Shares of TRVG have fallen 3.8% over the past six months to close the last trading session at $2.27.
TRVG’s POWR ratings reflect excellent prospects. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system.
TRVG has a B grade for value and quality. It is ranked #18 in the same industry.
In addition to the POWR ratings highlighted above, you can access TRVG’s Ratings for Growth, Momentum, Stability and Sentiment here.
Stock #1: Travelzoo (TZOO)
TZOO operates as an online media company providing travel, entertainment and local experiences around the world. It operates in four segments: Travelzoo North America; Travelzoo Europe; Jack’s Flight Club; and New Initiatives.
In terms of EV/EBITDA, TZOO trades at 5.11x, 32.4% lower than the industry average of 7.56x. Its forward Price/Sales multiple of 1.18 is 4.2% lower than the industry average of 1.23. Likewise, the stock’s forward EV/Sales of 1.15x is 38.7% lower than the industry average of 1.87x.
For the first fiscal quarter that ended March 31, 2024, TZOO’s revenue rose 1.8% year-over-year to $21.99 million. The company’s non-GAAP operating income rose 8.3% from a year ago to $6 million. Additionally, the company’s net income attributable to TZOO and net earnings per share totaled $4.24 million and $0.31, up 15.3% and 34.8%, respectively, over the prior-year quarter.
The Street expects TZOO’s revenue for the fiscal second quarter (ending June 2024) to rise 2.8% year-over-year to $21.72 million. The company’s EPS is expected to grow 41.1% from last year’s quarter to $0.25. Also, the company has topped consensus EPS estimates in three of the trailing four quarters, which is remarkable.
Over the past nine months, the stock has gained 8.4% to close the last trading session at $7.87.
TZOO’s strong fundamentals are reflected in its POWR ratings. It has an overall rating of B, which equates to a Buy in our proprietary rating system.
TZOO gets an A for quality and value and a B for feel. The stock ranks #5 in the same industry.
Click here to access additional TZOO ratings (Growth, Momentum and Stability).
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Shares of CHGG were trading at $3.64 a share on Wednesday afternoon, up $0.02 (+0.55%). Year-to-date, CHGG is down -67.96%, versus a 12.56% gain in the benchmark S&P 500 over the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She has a bachelor’s degree in finance and marketing and is pursuing the CFA program. Its fundamental approach to stock analysis helps investors identify the best investment opportunities. More…
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