Regardless of the state of the economy, it's a given that the Internet will continue to grow. It's also true that revenue should grow from both e-commerce and online advertising. That's because the percentage of advertising going online is increasing at the severe expense of print advertising, television advertising, and so on. Online commerce is expected to experience double-digit growth as well.In 2006, Internet retail sales were up 24% year over year. 2006 was also the first $100 billion-plus year for e-commerce, with overall online retail sales coming in at $102 billion for the year. Online advertising is expected to go from $18 billion in 2005 to $24 billion in 2006 and still be a single-digit percentage of overall advertising, implying there's heavy growth ahead. So I believe it's worth taking a look at the stocks behind the top 20 biggest Web sites in the world, ranked by unique users last month. The first couple of stocks are obvious, but there are some surprises on the list. I've written a lot about Yahoo! ( YHOO) in the past, so I won't go into all my reasons for being bullish on the stock. But the fact remains that it's the most popular Web site in the world, ranked at No. 1 with 117 million unique users. And that doesn't even account for the fact that it owns several other names on the list, including Geocities.com (with 21 million unique users), which came in at No. 19. Yahoo! owns a host of other up-and-coming popular sites, such as flickr.com (the best photo-sharing site), MyBlogLog.com (the fastest-growing social network for blogs) and del.icio.us.com (the best social search engine). And don't forget hotjobs.com and Yahoo! Finance (the largest financial Web site with 12 million unique users). Don't count Yahoo! out just because it lost search. The biggest Web site in the world -- and growing -- is going to do well this year. Google ( GOOG) is, of course, No. 2 on the list, with 108 million unique users.
(And don't forget the Google-owned YouTube.com, which came in at No. 15 with 25 million unique users.) To my regret, I've never been superbull on Google, but I'm not bearish either. If it can monetize even one more of its initiatives -- Gmail, Google Finance, Google Maps, and so on -- the stock could be worth significantly more than it is now.And before you go thinking that Google is too expensive, it's worth seeing the list of quality hedge funds and mutual funds that still own the stock, including Legg Mason Value, Tiger Management spinoff Viking Global and the Janus Adviser 40, which was up at an annualized rate of 15.4% over the past three years. Not to mention the other 1,400 Stockpickr portfolios that own Google. Skipping down the list a few notches, I'm beginning to like New York Times ( NYT). The print industry is dead, and The New York Times publication is going to see more layoffs, shrink its pages (both the number and the actual width of the pages) and probably continue to bleed subscribers from its print publications. But New York Times also owns About.com, which is No. 12 on the list with 38 million unique users.
- 2005: $2.1 billion
- 2006: $2.08 billion
- 2007 (estimate): $2.01 billion (Source: Bear Stearns)
- 2005: $43 million
- 2006: $77.8 million
- 2007 (estimate): $105 million (Source: Bear Stearns)