Celebrate 25 Years of the World Wide Web with These Profitable Internet Stocks

Mary-Lynn Cesar, Kapitall: The World Wide Web turned 25 this week, so we compiled a list of increasingly profitable Internet stocks.

As of Wednesday, the World Wide Web has now existed for a quarter of a century. British computer scientist Sir Tim Berners-Lee proposed the creation of the Web on March 12, 1989, calling for the development of an “information management” system that would allow users around the globe to access different files and pages via their computers.

[Read more from Kapitall: March Madness Stocks: Will Buffett’s Billion Dollar Bet Pay Off?]

Over a year later, on Christmas Day, Berners-Lee launched the world’s first website at the European Organization for Nuclear Research (CERN). Its focus: the World Wide Web project. The development of the Web then allowed the Internet, an interconnected network that had already existed for almost 20 years, to become widely accessible.

Today, according to Netcraft’s March Web Server Survey, there are 919,533,715 active websites online. According to The Pew Research Center 87% of American adults use the Internet today, up from 14% in 1995 when they first began compiling data. 

Globally, internet usage numbers are considerably lower. The United Nations’ International Telecommunications Union agency estimates that 2.7 billion people, or 39% of the global population, use the Internet. The Americas and the Asia & Pacific regions have the highest numbers of people going online, with 582 million and 1.27 billion Internet users, respectively.

Investing Ideas

To commemorate the occasion, we decided to look for investment opportunities among Internet stocks.  To begin, we constructed a universe comprised of Internet stocks belonging to the following industries: catalog & mail order houses, Internet information providers, and specialty retail, other. We then narrowed down that list by screening for stocks that appear to be getting better with each passing year. In this case, we focused on profitability and screened for stocks with rising diluted normalized earnings per share (EPS) for the past three consecutive years

EPS refers to the amount of profit allocated to each outstanding share of common stock. Diluted EPS tends to be lower and more conservative than normalized EPS because it includes account options when dividing normalized profit by shares. 

We were left with six stocks on our list.

The List

Click on the interactive chart to view return data over time. 

 Do you think these Internet stocks will continue to increase their profits? Use this list as a starting point for your own analysis.

1. OpenTable, Inc. ( OPEN): Provides restaurant reservation solutions in the United States, Canada, Mexico, Europe, and Asia.

Market cap at $1.91B, most recent closing price at $82.03.

Diluted normalized EPS increased from 0.62 to 0.88 during the first time interval (12 months ending 2011-12-31 vs. 12 months ending 2010-12-31). For the second time interval, diluted normalized EPS increased from 0.88 to 1.04 (12 months ending 2012-12-31 vs. 12 months ending 2011-12-31). And for the last time interval, the EPS increased from 1.04 to 1.45 (12 months ending 2013-12-31 vs. 12 months ending 2012-12-31).

 

 

2. Yandex N.V. ( YNDX): Operates an Internet search engine in Russia.

Market cap at $10.39B, most recent closing price at $31.84.

Diluted normalized EPS increased from 6.52 to 12.37 during the first time interval (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31). For the second time interval, diluted normalized EPS increased from 12.37 to 17.59 (12 months ending 2011-12-31 vs. 12 months ending 2010-12-31). And for the last time interval, the EPS increased from 17.59 to 24.5 (12 months ending 2012-12-31 vs. 12 months ending 2011-12-31).

 

 

3. Akamai Technologies, Inc. (AKAM) ( AKAM): Provides services for accelerating and improving the delivery of content and applications over the Internet in the United States and internationally.

Market cap at $10.8B, most recent closing price at $60.44.

Diluted normalized EPS increased from 0.9 to 1.06 during the first time interval (12 months ending 2011-12-31 vs. 12 months ending 2010-12-31). For the second time interval, diluted normalized EPS increased from 1.06 to 1.12 (12 months ending 2012-12-31 vs. 12 months ending 2011-12-31). And for the last time interval, the EPS increased from 1.12 to 1.62 (12 months ending 2013-12-31 vs. 12 months ending 2012-12-31).

 

 

4. LinkedIn Corporation ( LNKD): Operates an online professional network.

Market cap at $24.35B, most recent closing price at $203.08.

Diluted normalized EPS increased from 0.04 to 0.13 during the first time interval (12 months ending 2011-12-31 vs. 12 months ending 2010-12-31). For the second time interval, diluted normalized EPS increased from 0.13 to 0.19 (12 months ending 2012-12-31 vs. 12 months ending 2011-12-31). And for the last time interval, the EPS increased from 0.19 to 0.19 (12 months ending 2013-12-31 vs. 12 months ending 2012-12-31).

 

 

5. Yahoo! Inc. ( YHOO): Operates as a digital media company that delivers personalized digital content and experiences, across devices and worldwide.

Market cap at $38.95B, most recent closing price at $37.50.

Diluted normalized EPS increased from 0.75 to 0.88 during the first time interval (12 months ending 2011-12-31 vs. 12 months ending 2010-12-31). For the second time interval, diluted normalized EPS increased from 0.88 to 1 (12 months ending 2012-12-31 vs. 12 months ending 2011-12-31). And for the last time interval, the EPS increased from 1 to 1.27 (12 months ending 2013-12-31 vs. 12 months ending 2012-12-31).

 

 

6. Baidu, Inc ( BIDU): Provides Internet search services.

Market cap at $60.94B, most recent closing price at $174.18.

Diluted normalized EPS increased from 42.7 to 100.96 during the first time interval (12 months ending 2010-12-31 vs. 12 months ending 2009-12-31). For the second time interval, diluted normalized EPS increased from 100.96 to 189.88 (12 months ending 2011-12-31 vs. 12 months ending 2010-12-31). And for the last time interval, the EPS increased from 189.88 to 298.92 (12 months ending 2012-12-31 vs. 12 months ending 2011-12-31).

 

(List compiled by Mary-Lynn Cesar, a Kapitall Writer. EPS data sourced from Yahoo! Finance. Return data sourced from Zack's Investment Research. All other data sourced from Finviz.)

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