AOL Inc. (AOL): Today's Featured Internet Laggard

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

AOL ( AOL) pushed the Internet industry lower today making it today's featured Internet laggard. The industry as a whole closed the day down 0.2%. By the end of trading, AOL fell $1.12 (-3%) to $36.90 on average volume. Throughout the day, 2.2 million shares of AOL exchanged hands as compared to its average daily volume of 1.6 million shares. The stock ranged in price between $36.63-$37.81 after having opened the day at $37.81 as compared to the previous trading day's close of $38.02. Other companies within the Internet industry that declined today were: Groupon ( GRPN), down 24.3%, LookSmart ( LOOK), down 7.2%, ModusLink Global Solutions ( MLNK), down 5%, and Zynga Inc Class A ( ZNGA), down 4%.
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AOL Inc. operates as a Web services company that offers a suite of brands and offerings for the worldwide audience. Its business spans online content, products, and services for consumers, publishers, and advertisers. AOL has a market cap of $3.14 billion and is part of the technology sector. The company has a P/E ratio of 3.8, below the S&P 500 P/E ratio of 17.7. Shares are up 28.4% year to date as of the close of trading on Wednesday. Currently there are five analysts that rate AOL a buy, two analysts rate it a sell, and four rate it a hold.

TheStreet Ratings rates AOL as a buy. The company's strengths can be seen in multiple areas, such as its compelling growth in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the internet industry could consider First Trust Dow Jones Internet Idx ( FDN) while those bearish on the internet industry could consider ProShares Ultra Short Technology ( REW).

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