With stocks tanking the most that we have seen in recent months on Monday, it may not be a perfect background to discuss growth stocks. However, the sell-off, triggered in part by the weaker than expected growth figures in China, has only made internet information stocks such as Move Inc. (NASDAQ:MOVE), Bankrate Inc (NYSE:RATE) , and OpenTable Inc (NASDAQ:OPEN) more attractive.
Move to follow housing?
Move Inc. (NASDAQ:MOVE) offers a network of consumer-focused websites for real estate search, finance, moving, and home enthusiasts. Apart from generating revenue from business listings, the company’s other revenue stream is its lead management software for real estate agents and brokers.
The company’s revenue grew 11.5% to $52.7 million in the three months ending Dec. 31, 2012, which is an indication of its strong market standing. However, profitability came under pressure as net income dropped to $1.59 million from $3.98 million. This had an predictable impact on the stock price which has been on a decline lately. It has lost nearly 11% from its 52-week high levels seen in March-end.
However, there is a strong case for this zero-debt company, which fundamentally mimics the performance of the housing sector. With U.S. housing gradually coming out of woods, Move Inc. (NASDAQ:MOVE) stands to benefit as more people look to own homes or move to bigger ones.
Majority of the U.S. population as potential market
Florida-based online aggregator of personal finance content, Bankrate Inc (NYSE:RATE), presents a strong case of future growth. The company offers actionable set of information on more than 300 financial products, including mortgages, deposits, insurance, credit cards, retirement, automobile loans, and taxes. In a sense, a wide majority of the U.S. population forms the addressable market of the company.
Thus, the company offers further upside. Its current price earnings ratio of 44.5 may appear a bit too high, but the metric falls to 19.6 for the next 12 months as a strong indication of improved profitability in the future.
Although financial performance in recent quarters has been disappointing at best, the stock price has come down adequately to reflect it. In February, shares of Bankrate Inc (NYSE:RATE) dropped to a 52-week low as EPS came in at $0.06 a share, below estimates of $0.11. The drop appears to be a blessing in disguise and offers an excellent entry point for investors. The fact that its fundamentals are in place was further highlighted by a ‘Buy’ rating from Stifel on Friday, which saw the stock zooming over 12%.
OpenTable presents a buying opportunity?
OpenTable Inc (NASDAQ:OPEN) is another Internet stock which is available at lower levels after dropping 8% over the last month or so. The company provides restaurant reservation solutions primarily in all 50 states in the U.S. in addition to Canada, Germany, Japan, Mexico, and the United Kingdom.
Despite the recent pullback, which appears nothing more than a technical correction, the stock is up 34% over the year. This has been made possible by a series of encouraging financial performance quarter after quarter which helps in keeping some sanity in valuations.
For the twelve months ended Dec. 31, 2012, OpenTable Inc (NASDAQ:OPEN) had a 15.8% increase in top line while profit grew 11.2%. This was the fourth straight year of swelling revenue and profit. Although its forward price earnings ratio of 25 is not really cheap, this is probably the lowest in recent months for this debt-free company.
Foolish bottom line
Since traditional valuation techniques don’t capture key aspects of these growth companies, prospective investments in these stocks carry a bit of ‘leap of faith.’ This is bound to happen as some of these companies, such as OpenTable Inc (NASDAQ:OPEN), are not excelling in traditional markets but are creating new markets altogether. Overall, the stocks represent some of the best names around to participate in the emerging economy.
The article Are These Internet Information Stocks Primed for Another Run? originally appeared on Fool.com.
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