Media

Top Internet and Social Media Stocks to Buy for the Rest of 2014

If one sector stands out as still having incredible growth potential for 2014 and beyond, it is the Internet and social media stocks. While 2013 was marked by surging performance for most Internet stocks, in 2014 investors have been much more discriminating of companies’ fundamentals and sensitive to valuation. That has kept a lid on prices, which could allow for some solid appreciation going forward.

A new report from the analysts at Wunderlich focuses on the top names that are adept at targeting the secular trends of mobile, local, analytics/data, marketplaces, and user-generated content as the companies that are most likely to expand their market cap over the rest of the year and into 2015. It also stresses that investors buy the stocks of the companies that are best positioned to capture mobile advertising and mobile commerce dollars.

With a very pricey market, and earnings season right around the corner, investors should tread carefully now. With that in mind, these top Internet and social media names should continue to remain fast growers over the years and could provide some nice lift to an aggressive, risk tolerant account.

Here are the top Internet and social media stocks to buy now at Wunderlich.

Angie’s List Inc. (NASDAQ: ANGI) stock got a rude awakening last month when Amazon.com announced it was planning to launch a local-services marketplace later this year. Starting with a single market, Amazon looks to test demand and logistics before rolling out nationwide. Angie’s List stock has held in well, and the company has a loyal following of subscribers. Wunderlich has a $15 price target. The Thomson/First Call estimate is much higher at $19.13. Shares closed trading Monday at $11.82 a share.

ALSO READ: 13 Analyst Stocks Under $10 With Huge Implied Upside

Groupon Inc. (NASDAQ: GRPN) may be the ultimate contrarian call as the stock is down a gigantic 50% this year. The company is expanding its in-store payments business with a new service that lets merchants identify customers with the company’s coupons and enable them to pay for purchases using an iPad mini. Merchants will pay Groupon a small monthly fee for the tablet and also a transaction charge. The introduction of the service follows more than a month of trials in five cities, where 98% to 99% of businesses approached decided to adopt the system.

If nothing else, Groupon’s stock may be a low price loss-leader, and perhaps a takeover candidate. The Wunderlich price target is $10, and consensus target is lower at $8.38. Groupon closed Monday at $6.45.

LinkedIn Corp. (NYSE: LNKD) is not an e-commerce powerhouse by any means, but it dominates the interconnecting of professionals. LinkedIn has more than 300 million members worldwide, with millions more being added every year, making it the most valuable social networking site for business to business marketing today. The LinkedIn price target from Wunderlich is a stunning $250. The consensus for this former momentum darling is up there as well at $223.08. Shares closed Monday at $169.25.

MeetMe Inc. (NASDAQ: MEET) is a small-cap name that could bring investors very large gains. As the name would suggest, the company is the leading social network for meeting new people in the United States and the public market leader for social discovery. MeetMe makes meeting new people fun through social games and apps, monetized by both advertising and virtual currency. With 75% of traffic coming from mobile, MeetMe is fast becoming the social gathering place for the mobile generation.

The company operates MeetMe.com and MeetMe apps on iPhone, iPad and Android in multiple languages. Wunderlich as a $4.50 price target, and the consensus is slightly higher at $4.67. The stock closed Monday at $2.60.

RetailMeNot Inc. (NASDAQ: SALE) was down big in the spring and many were blaming the big hit on the IPO of Coupons.com. Wall Street analysts point out that the businesses of the two companies do not overlap significantly — 75% of the revenue generated by Coupons.com comes from consumer packaged goods companies, while the vast majority of RetailMeNot’s revenue comes from national retailers. The Wunderlich price target is $48, and the consensus target is lower at $44.80. The stock closed Monday at $25.14.

ALSO READ: Merrill Lynch Picks 10 Value Stocks to Buy for the Rest of 2014

Shutterstock Inc. (NYSE: SSTK) is the undisputed leader for online commercial digital imagery. It is the “you name it, we have it” one-stop shop for any commercial or personal image or video need. The company offers its products for users to enhance their visual communications, such as Websites, digital and print marketing materials, corporate communications, books, publications and video content. Wunderlich has a $92 price target, and the consensus target is $89.20. The stock closed Monday at $82.64.

Yelp Inc. (NYSE: YELP) has backed off nicely from 52-week highs, offering a much better entry point for investors. With the Priceline purchase of OpenTable, chatter has increased on Wall Street about a potential buyer for Yelp. Many point to the synergies of a purchase by Yahoo!, while other suggest it would be a good fit for Expedia.

Either way, Yelp has a massive sales force and relationships with more restaurants than any other site. Wunderlich has a $105 price target, and the consensus figure is $84.67. Shares closed Monday at $75.76.

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