NEW YORK (TheStreet) -- With Alibaba (BABA) reporting earnings today, we decided to take a look at the best internet retail companies to invest in.

Internet retail is the future of shopping. Purchasing items online is convenient for consumers and it's no surprise e-commerce sales continue to grow. Internet retail sales usually mirror the economy. If the economy is good, people have more disposable income and tend to spend more, therefore, internet retail sales go up. With the economy doing fairly well, there are good e-commerce stocks out there to buy. 

So what are the best internet retail companies investors should be buying? Here are the top three, according to TheStreet Ratings, TheStreet's proprietary ratings tool.

TheStreet Ratings projects a stock's total return potential over a 12-month period including both price appreciation and dividends. Based on 32 major data points, TheStreet Ratings uses a quantitative approach to rating over 4,300 stocks to predict return potential for the next year. The model is both objective, using elements such as volatility of past operating revenues, financial strength, and company cash flows, and subjective, including expected equities market returns, future interest rates, implied industry outlook and forecasted company earnings.

Buying an S&P 500 stock that TheStreet Ratings rated a "buy" yielded a 16.56% return in 2014 beating the S&P 500 Total Return Index by 304 basis points. Buying a Russell 2000 stock that TheStreet Ratings rated a "buy" yielded a 9.5% return in 2014, beating the Russell 2000 index, including dividends reinvested, by 460 basis points last year.

Check out which three internet retail companies made the list. And when you're done be sure to read about which mid-cap oil companies to sell now. Year-to-date returns are based on May 6, 2015 closing prices. The highest-rated stock appears last -- read more to see which one is No. 1.

PETS ChartPETS data by YCharts
3. PetMed Express, Inc. (PETS)

Rating: Buy, A-
Market Cap: $330.5 million
Year-to-date return: 13.5%

PetMed Express, Inc. and its subsidiaries, doing business as 1-800-PetMeds, operates as a pet pharmacy in the United States. The company markets prescription and non-prescription pet medications, health products, and supplies for dogs and cats.

"We rate PETMED EXPRESS INC (PETS) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in net income, revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and reasonable valuation levels. We feel these strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 9.4% when compared to the same quarter one year prior, going from $4.53 million to $4.95 million.
  • PETS's revenue growth trails the industry average of 19.9%. Since the same quarter one year prior, revenues slightly increased by 2.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
  • PETS has no debt to speak of therefore resulting in a debt-to-equity ratio of zero, which we consider to be a relatively favorable sign. Along with this, the company maintains a quick ratio of 7.16, which clearly demonstrates the ability to cover short-term cash needs.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 29.06% over the past year, a rise that has exceeded that of the S&P 500 Index. Regarding the stock's future course, although almost any stock can fall in a broad market decline, PETS should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
Must Read:  3 Movies & Entertainment Companies to Add to Your Portfolio Right Now

EXPE ChartEXPE data by YCharts
2. Expedia Inc. (EXPE)

Rating: Buy, A-
Market Cap: $12.5 billion
Year-to-date return: 16.1%

Expedia, Inc., together with its subsidiaries, operates as an online travel company in the United States and internationally. The company operates in two segments, Leisure and Egencia.

"We rate EXPEDIA INC (EXPE) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its solid stock price performance, impressive record of earnings per share growth, compelling growth in net income, revenue growth and notable return on equity. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Powered by its strong earnings growth of 409.09% and other important driving factors, this stock has surged by 32.73% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, EXPE should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • EXPEDIA INC reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, EXPEDIA INC increased its bottom line by earning $3.00 versus $1.66 in the prior year. This year, the market expects an improvement in earnings ($3.92 versus $3.00).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 408.6% when compared to the same quarter one year prior, rising from -$14.30 million to $44.14 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 19.8%. Since the same quarter one year prior, revenues rose by 14.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The company's current return on equity greatly increased when compared to its ROE from the same quarter one year prior. This is a signal of significant strength within the corporation. Compared to other companies in the Internet & Catalog Retail industry and the overall market, EXPEDIA INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
Must Read:  3 Best Casino Stocks to Gamble on Right Now

PCLN ChartPCLN data by YCharts
1. The Priceline Group Inc. (PCLN)

Rating: Buy, A-
Market Cap: $65.6 billion
Year-to-date return: 10.8%

Expedia, Inc., together with its subsidiaries, operates as an online travel company in the United States and internationally. The company operates in two segments, Leisure and Egencia.

"We rate PRICELINE GROUP INC (PCLN) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its increase in stock price during the past year, impressive record of earnings per share growth, compelling growth in net income, robust revenue growth and largely solid financial position with reasonable debt levels by most measures. Although no company is perfect, currently we do not see any significant weaknesses which are likely to detract from the generally positive outlook."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
  • PRICELINE GROUP INC has improved earnings per share by 19.9% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, PRICELINE GROUP INC increased its bottom line by earning $45.73 versus $36.01 in the prior year. This year, the market expects an improvement in earnings ($56.84 versus $45.73).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Internet & Catalog Retail industry. The net income increased by 19.5% when compared to the same quarter one year prior, going from $378.08 million to $451.83 million.
  • Despite its growing revenue, the company underperformed as compared with the industry average of 19.8%. Since the same quarter one year prior, revenues rose by 19.4%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The current debt-to-equity ratio, 0.45, is low and is below the industry average, implying that there has been successful management of debt levels. Along with this, the company maintains a quick ratio of 3.58, which clearly demonstrates the ability to cover short-term cash needs.
Must Read:  3 Best Tobacco Stocks to Add to Your Portfolio Right Now

More from Opinion

Nasdaq Exec: Exchange Is 'All-In' on Using Blockchain Technology

Nasdaq Exec: Exchange Is 'All-In' on Using Blockchain Technology

Sears CEO Eddie Lampert Looks Like He Is Sucking Company Dry

Sears CEO Eddie Lampert Looks Like He Is Sucking Company Dry

It's Dumb to Think Legalizing Weed Is Still a Political Issue

It's Dumb to Think Legalizing Weed Is Still a Political Issue

AAP Exclusive: Cramer Says The President is No Longer on the Side of the Bulls

AAP Exclusive: Cramer Says The President is No Longer on the Side of the Bulls

Why It Makes Perfect Sense for Netflix and Amazon to Buy Up Movie Theaters

Why It Makes Perfect Sense for Netflix and Amazon to Buy Up Movie Theaters