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 up 0.3%. By the end of trading, AOL fell $3.68 (-8.9%) to $37.74 on heavy volume. Throughout the day, 3,956,281 shares of AOL exchanged hands as compared to its average daily volume of 1,552,100 shares. The stock ranged in price between $36.70-$39.73 after having opened the day at $39.24 as compared to the previous trading day's close of $41.42. Other companies within the Internet industry that declined today were: ValueClick ( VCLK), down 15.8%, Trulia ( TRLA), down 7.8%, Friendfinder Networks ( FFN), down 7.1% and Net Element International ( NETE), down 7.1%.
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AOL Inc., a Web services brand company, offers a suite of online content, products, and services to consumers, advertisers, publishers, and subscribers worldwide. AOL has a market cap of $3.2 billion and is part of the technology sector. The company has a P/E ratio of 3.7, below the S&P 500 P/E ratio of 17.7. Shares are up 39.9% year to date as of the close of trading on Tuesday. Currently there are 7 analysts that rate AOL a buy, 1 analyst rates it a sell, and 3 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.

On the positive front, Deltathree ( DDDC), down 21.9%, ( SOHU), down 7.2%, Phoenix New Media ( FENG), down 4.2% and Zynga Inc Class A ( ZNGA), down 4.2% , were all gainers within the internet industry with Yahoo ( YHOO) being today's featured internet industry leader.

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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