The importance of the Internet has skyrocketed since the global pandemic hit the world, forcing most of the population to go online for all daily activities. According to a report by EarthWeb, globally, 4.95 billion people will use the internet daily in 2022, up 6.2% year-over-year.
As human reliance on the web has proliferated over the past 30 years, the web has also undergone a seismic transformation over this time, with the next evolutionary step being Web 3.0.
Social media and the growing emergence of e-commerce have acted as catalysts for increasing the number of internet users around the world. About 4.62 billion people around the world are now using social media, which accounts for about 58.4% of the total global population, and 424 million new users logged on in the last 12 months.
Against this backdrop, we think it might make sense to invest in fundamentally sound internet stocks Yelp Inc. (YAP), Perion Network Ltd. (PERI) and Opera Limited (RPO), which are currently trading at discounted prices relative to their peers.
Yelp Inc. (YAP)
YELP operates a platform connecting consumers to local businesses in the United States and abroad. The Company’s platform covers various categories of local businesses, including restaurants, stores, beauty and fitness, health and other categories, as well as household, premises, automotive, professional, pet company, events, real estate and financial.
In terms of forward non-GAAP P/E, YELP is currently trading at 11.23x, 34.2% below the industry average of 13.78x. Additionally, in terms of EV/Futures, the stock is currently trading at 1.56x, which is 19.6% below the industry average of 1.94x.
During the first quarter ending March 31, 2022, total revenue increased 19.2% year over year to $276.63 million. Its adjusted EBITDA rose 10% from its value a year ago to $48.09 million. The company’s loss per share narrowed 87.5% from the year-ago quarter to $0.01.
Analysts expect YELP’s revenue to grow 11.3% year-over-year to $286.25 million for the second quarter ending June 2022. The EPS consensus estimate of $0.78 represents a 25.3% year-over-year improvement for the third quarter ending September 2022.
Additionally, it has an impressive track record of earnings surprises, as it has exceeded consensus EPS estimates in three of the past four quarters.
YELP POWR Rankings reflect this promising prospect. The company has an overall rating of A, which translates to Buy in our proprietary rating system. POWR ratings rate stocks on 118 different factors, each with its own weighting.
The stock also has an A rating for value and quality and a B rating for growth. In category F the Internet industry, it is ranked #1 out of 65 stocks.
To see additional POWR ratings for Sentiment, Stability, and Momentum for YELP, Click here.
Perion Network Ltd. (PERI)
Based in Holon, Israel, PERI provides digital advertising solutions to brands, agencies and publishers in North America, Europe and internationally. It provides Wildfire, a content monetization platform; search monetization solutions, including website monetization, search mediation, and app monetization; and cross-channel digital advertising software as a service platform.
In April, PERI announced that its search advertising business unit, CodeFuel, had been named Microsoft Advertising’s 2021 Global Sourcing Partner of the Year. CodeFuel was selected as a global supply partner from Microsoft Advertising’s regional winners, all distinguished and effective partners across the Americas, EMEA and APAC.
The company is one of only five companies in the world to have achieved Global Partner status, each in its own area of expertise.
In non-GAAP forward P/E terms, PERI is currently trading at 17.06x, 37.1% below the industry average of 17.06x. Additionally, in terms of EV/Futures, the stock is currently trading at 0.80x, which is 58.9% below the industry average of 1.94x.
During the first quarter ending March 31, 2022, PERI’s total revenue increased 40% year over year to $125.30 million. From the company operating income rose 327.3% from its value a year ago to $16.51 million, while its non-GAAP net income improved 196% from its quarter of the year previous $20.70 million. The company’s non-GAAP EPS increased 132% from the prior period to $0.44.
The consensus EPS estimate of $0.30 for the second quarter ending June 2022 represents 57.9% year-over-year growth. Analysts expect PERI’s revenue to grow 33.4% year-over-year to $146.34 million for the second quarter ending June 2022. The company’s shares have jumped 3.6% over the past nine months.
PERI’s strong fundamentals are reflected in its POWR ratings. The stock has an overall rating of B, which is equivalent to Buy in our proprietary rating system. The stock has an A rating for value and sentiment and a B for growth. In category D Internet Services industry, it is ranked #1 out of 31 stocks.
In total, we rate PERI on eight different levels. Beyond what we’ve stated above, we’ve also given PERI ratings for quality, stability, and momentum. Get all PERI ratings here.
Limited Opera (RPO)
OPRA provides mobile and PC web browsers. It has two operating segments, Browser and News, and Others. The company offers mobile browser products, such as Opera Mini, Opera for Android and iOS, Opera GX Mobile and Opera Touch; PC browsers, including Opera for computers and Opera GX; and Opera News, an AI-powered personalized news aggregation and discovery service.
Last month, OPRA became the first major browser to offer a free, unlimited, no-log in-browser VPN service. OPRA is now bolstering its security features with the new VPN Pro subscription service, a premium device-wide VPN that can also be used without installing a separate app. The new VPN Pro service is available for OPRA for Android users.
Additionally, last month, OPRA announced the successful integration of BNB Chain into its Crypto Browser. BNB Chain is the largest smart contract blockchain in terms of daily active users (DAUs) and hosts a plethora of community and decentralized applications (dApps).
The integration will allow users to buy the BNB token with fiat, send and receive it using the integrated Opera crypto wallet, and access dApps on the BNB channel.
In terms of EV/Futures, the OPRA is currently trading at 1.06x, which is 62.3% below the industry average of 2.82x. Additionally, in terms of price/sales futures, the stock is currently trading at 1.65x, which is 41% below the industry average of 2.80x.
OPRA’s revenue increased 38.8% year-over-year to $71.58 million for the first quarter ended March 31, 2022. Its operating profit was 1. $34 million, compared to an operating loss of $1.46 million in the prior period, while its adjusted EBITDA increased by $60.6 million. % of its value a year ago at $7.35 million.
The consensus EPS estimate of $0.25 represents 397.6% year-over-year growth for fiscal 2022. The revenue estimate of $71.78 million for the second quarter is ending June 2022 represents 19.3% year-over-year growth.
Not surprisingly, the OPRA has an overall rating of B, which equates to Buy in our POWR rating system. OPRA has an A rating for value and a B for sentiment. Within the Internet industry, it is ranked #5.
Click here to see additional POWR ratings for OPRA (momentum, stability, quality and growth).
YELP shares were trading at $28.47 per share on Wednesday afternoon, down $0.11 (-0.38%). Year-to-date, YELP is down -21.44%, compared to a -19.33% rise in the benchmark S&P 500 over the same period.
About the Author: Spandan Khandelwal
Spandan’s is a financial journalist and investment analyst specializing in the stock market. Through its ability to interpret financial data, it aims to help investors assess a company’s fundamentals before investing. After…