There are difficult sectors for an analyst to cover and then there are really difficult sectors to cover, and the internet sector falls into the second category. Ygal Arounian, who covers several issues in that sector for Wedbush Securities, joined the "PreMarket Prep Plus" broadcast Wednesday to discuss a few issues in his area of coverage.
E-Commerce: In this space, one of Arounian's picks is BigCommerce H Inc. BIGC Arounian sees its valuation being “at or near trough levels.” He is encouraged by the broad expansion into e-commerce as well as the increase in overall retail spending over the last few years and expects that to continue in 2022.
Moving forward, he expects businesses to continue to expand their e-commerce operations, especially the “mid-market enterprises.” That will add to the “top-line growth” for the company and its “unique product fit” will provide solid “long-term opportunities," he told Benzinga.
He favors Alphabet Inc. GOOG GOOGL, which has been able to navigate through Apple’s changes with its massive “search” capabilities. In addition, the YouTube division of the company “has a long runway for growth” that is still in its early stages, the analyst said.
Real Estate Technology: Although technology has changed the landscape of many businesses, Arounian suggests the real estate industry is still in the “early stages of disruption.”
One catalyst for the overall industry moving forward is that the housing market has cooled off over the last months and the “cyclicality of the industry” will be positive, he said.
Arounian identified Zillow Group Inc. Z as the potential leader in the growing sector. He acknowledged that rising rates may be a negative catalyst for the industry, but he forecasts the “housing market to continue to see strong demand.”
Another the positive catalysts is how “technology is changing the largest asset class in the United States.” Not only has technology facilitated the search for real estate, but the “ease of how transactions can be conducted is still in its early stages,” the analyst said.
The full discussion from Wednesday’s broadcast can be found here:
Photo courtesy of Zillow.
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