A few small-cap Internet stocks that performed poorly in 2014 could be set for a comeback, an analyst said Monday.
Small-cap stocks in the sector were down an average of 18 percent in 2014 excluding new issues, versus a 5 percent average decline for their large-cap Internet brethren.
Presently, small caps in the Internet sector are cheap and getting cheaper relative to larger competitors, according to Bank of America's Justin Post.
Post said a valuation bounce could be in store for certain companies with stable or improving competitive dynamics and cites for example the likes of Groupon Inc GRPN and Coupons.Com Inc COUP.
Post also likes companies in the group with heavy exposure to the U.S. market, and cites for example GrubHub Inc GRUB and Pandora Media Inc P.
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Other possible Internet investment trends for 2015 include merger deals driven by comparatively low small-cap valuations and heavy competition.
Post pointed out takeover speculation that continues to swirl around companies like Yahoo! Inc. YHOO, Groupon, Yelp Inc YELP and eBay Inc EBAY.
Post also referenced the continuing fragmentation of the social media market, with relatively new channels like Instagram, Pinterest and Snapchat nipping at Facebook Inc's FB heels.
"A portfolio strategy may be best" for investing in social media as "one general site cannot be all things to all people," Post said.
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