Internet stocks’ third-quarter 2020 performance is expected to have significantly benefited from an uptick in the demand for Internet-based services and products as a result of the coronavirus-led growing work-from-home and learn-from-home trends.
Moreover, the practice of social distancing in a bid to contain the virus outbreak has bolstered growth of online shopping services globally, which, in turn, is expected to have remained a major tailwind.
Further, the growing proliferation of video conferencing tools, thanks to the increasing remote working trend, is anticipated to have remained a positive in the quarter under review.
Additionally, increased user engagement on social media platforms, owing to the coronavirus outbreak-led lockdowns and shelter-at-place guidelines, is likely to have aided growth of the Internet companies that offer such platforms.
This is evident from the better-than-expected performance delivered recently by Snap
SNAP
. The company’s third-quarter 2020 results were primarily driven by an improved user engagement, which aided growth in its daily active users (DAU) base.
Prospects for Internet Stocks
In the coronavirus-hit world, Internet stocks have beengaining from the rapid adoption of cloud computing services, which are helping organizations to remotely process a lot of information, build and run crucial applications and services, and enable employees to work from anywhere across the globe.
Additionally, the emergence of remote health diagnostic and telehealth, which is spurring the Internet usage penetration, is likely to have been beneficial for Internet stocks in the third quarter.
Further, the increasing adoption of high-speed Internet services and the strengthening deployment of 5G technology have been tailwinds.
Also, the rising adoption of Internet-of-Things (IoT), and increasing proliferation of streaming services, online delivery services, online gaming and online payment services are expected to have aided the performance of the companies in the industry further.
Furthermore, the strengthening demand for SaaS-based (or Software as a Service) applications is expected to have remained another growth-driving factor for Internet stocks in the quarter under review.
How to Make the Right Pick?
With the presence of several industry participants, finding the right Internet stocks with the potential to beat on earnings can be daunting. Our proprietary methodology, however, makes this task fairly simple.
You could narrow down your choices by looking at the stocks that have the perfect combination of the two key elements: a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive
Earnings ESP
. You can uncover the best stocks to buy or sell before they’re reported with our
Earnings ESP Filter
.
Earnings ESP is our proprietary methodology for determining the stocks that have the maximum chances of beating estimates at their next earnings announcement. It is the percentage difference between the Most Accurate Estimate and the Zacks Consensus Estimate.
Our research shows that for stocks with this mix of ingredients, the odds of an earnings beat are as high as 70%.
Best Bets
Buenos Aires, Argentina-based
MercadoLibre
MELI
is slated to report third-quarter 2020 results on Nov 4. The company has an Earnings ESP of +258.97% and it sports a Zacks Rank #1 currently. You can see
the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for the bottom line has moved upward from a loss of 5 cents to a gain of 8 cents over the past 30 days.
Mountain View, CA-based
Alphabet
GOOGL
is scheduled to report third-quarter 2020 numbers on Oct 29. The company has an Earnings ESP of +7.40% and a Zacks Rank #2 currently. The Zacks Consensus Estimate for earnings has been revised upward by 1.2% to $11.34 per share in the past 30 days.
Oklahoma City, OK-headquartered
Paycom Software
PAYC
is slated to report third-quarter 2020 results on Nov 4. The company has an Earnings ESP of +7.97% and a Zacks Rank #2 currently. The Zacks Consensus Estimate for earnings has been revised upward by 1.8% to 57 cents per share in the past 30 days.
Brooklyn, NY-headquartered
Etsy
ETSY
is scheduled to report third-quarter 2020 results on Oct 28. The company has an Earnings ESP of +4.68% and a Zacks Rank #3 currently. The Zacks Consensus Estimate for earnings has been revised upward by 1.7% to 59 cents per share in the past 30 days.
Menlo Park, CA-headquartered
Facebook
FB
is scheduled to report third-quarter 2020 numbers on Oct 29. The company has an Earnings ESP of +2.34% and a Zacks Rank #3 currently. The Zacks Consensus Estimate for earnings has been revised upward by 1.04% to $1.93 per share in the past 30 days.
San Francisco, CA-based
Twitter
TWTR
is slated to report third-quarter 2020 results on Oct 29. The company has an Earnings ESP of +26.23% and a Zacks Rank #3 currently. The Zacks Consensus Estimate for earnings has been revised upward by 20% to 6 cents per share in the past 30 days.
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