Internet’s widespread adoption has fueled the rise of Internet services companies, which benefit from increased online activities like shopping, payments, and remote work. Moreover, the pandemic’s digitization push has further driven the demand, leading these companies to expand their offerings and assist enterprises in enhancing their operations.
Given the rosy prospects of the industry, I think robust internet stocks Wix.com Ltd. (WIX), Perion Network Ltd. (PERI), and 8×8, Inc. (EGHT) could be worth buying. These stocks are trading above their 50-day and 200-day moving averages, indicating an uptrend.
5G technology has become a significant breakthrough in the global telecom sector and is projected to transform almost all other sectors. In addition, 5G-enabled technologies are helping to support the development of intelligent manufacturing and smart factories by offering compelling advantages to manufacturers.
Thus, the global private 5G market is expected to grow at a CAGR of 49.7% to reach $41.80 billion by 2030.
In addition, the rising adoption of wireless technology, like Bluetooth, Wi-Fi, and GPS, is also expanding the growth scope of the wireless connectivity market. Also, the increasing demand for affordable smart wireless sensors is likely to drive growth.
According to a report by ReportLinker, the global wireless internet services market is estimated to reach $921.97 billion by 2027, growing at a 7% CAGR.
Let us take a detailed look at the above-mentioned stocks:
Wix.com Ltd. (WIX)
Headquartered in Tel Aviv, Israel, WIX develops and markets a cloud-based platform for creating websites and web applications. Its offerings include a visual development platform for customized website creation. The company also provides vertical-specific applications and complementary services like App Market and Owner App for website management.
WIX’s forward P/S multiple of 3.10 is 61.5% lower than its five-year average of 8.03. Its 2.98x forward EV/Sales is 60.7% lower than the 7.58 five-year average.
On July 17, WIX announced its plans to launch the AI Site Generator, along with a suite of AI-powered capabilities, many of which are already available to users. These offerings aim to equip Wix users with AI technology that significantly streamlines the entire website-building, design, and management process, offering more automated tools to operationalize and grow their businesses with never-before-seen ease.
On May 24, 2023, WIX announced that it completed a $300 million share repurchase program. The company repurchased approximately 3.6 million outstanding WIX ordinary shares, representing approximately 6% of total shares outstanding, at an approximate volume-weighted average price per share of $82.48.
During the first quarter that ended March 31, 2023, WIX’s total revenue increased 9.5% year-over-year to $374.08 million. Its non-GAAP operating income came in at $48.52 million, compared to a non-GAAP operating loss of $50.99 million in the year-ago quarter.
In addition, its non-GAAP net income came in at $51.10 million, compared to a non-GAAP net loss of $41.39 million in the prior-year quarter. Also, its non-GAAP EPS came in at $0.91, compared to a non-GAAP loss per share of $0.72 in the year-ago quarter.
Street expects WIX’s revenue to increase 10.8% year-over-year to $382.44 million for the to-be-announced quarter that ended June 30, 2023. It has surpassed the consensus EPS estimates in each of the trailing four quarters, which is remarkable.
Over the past year, the stock has gained 24.5% to close the last trading session at $83.62. It is also trading above its 50-day and 200-day moving averages of $78.96 and $83.45, indicating an uptrend.
WIX’s POWR Ratings reflect strong prospects. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
The stock has a B grade for Growth. It is ranked #6 in the 29-stock Internet – Services industry.
Click here to see the WIX’s additional ratings (Value, Momentum, Stability, and Sentiment).
Perion Network Ltd. (PERI)
Headquartered in Holon, Israel, PERI provides a comprehensive digital advertising ecosystem. It empowers brands, agencies, and publishers to effectively identify and engage customers across various channels. The company operates in three key areas of digital advertising: ad search; social media; and display, video, or CTV.
PERI’s forward EV/EBITDA and EV/EBIT multiples of 7.25 and 9.47 are 13.4% and 39.9% lower than the industry averages of 8.37 and 15.77.
PERI’s revenue increased 15.8% year-over-year to $145.15 million for the fiscal first quarter that ended March 31, 2023. Its adjusted EBITDA rose 38% from the year-ago quarter to $31.27 million. Also, the company’s non-GAAP net income and non-GAAP EPS grew 44.2% and 36.4% from the prior-year quarter to $29.90 million and $0.60, respectively.
PERI’s revenue is expected to rise 20% year-over-year to $176 million in the fiscal second quarter that ended June 2023. The company’s EPS for the same quarter is expected to grow 8.8% year-over-year to $0.45. Moreover, the company topped the consensus revenue and EPS estimates in all four trailing quarters.
The stock has gained 66.6% over the past year to close the last trading session at $33.91. It is trading above its 50-day and 200-day moving averages of $32.84 and $30.96, indicating an uptrend.
PERI’s positive outlook is reflected in its POWR Ratings. The stock has an overall rating of B, translating to Buy in our proprietary rating system.
PERI has a B grade for Value, Quality, and Sentiment. It is ranked #4 in the same industry.
To access PERI’s additional ratings for Growth, Momentum, and Stability, click here.
8×8, Inc. (EGHT)
EGHT provides voice, video, chat, contact center, and enterprise-class application programmable interface (API) Software-as-a-Service solutions for small and mid-size businesses, mid-market and larger enterprises, government agencies, and other organizations worldwide.
EGHT’s forward EV/Sales of 1.23x is 58.9% lower than the industry average of 2.99x. Its forward P/S multiple of 0.66 is 77.3% lower than the 2.93 industry average.
On July 20, EGHT announced that Kubota Tractor Corporation had deployed the 8x8 XCaaS™ (eXperience Communications as a Service™) cloud contact center and unified communications platform for increased flexibility and ease of use across the entire organization.
On July 13, EGHT announced the 8x8 Technology Partner Ecosystem, a new program that allows customer-first organizations to enhance customer experience by deeply embedding cutting-edge technologies, including leading artificial intelligence (AI) capabilities, into the 8x8 platform with persistent data to enhance business intelligence, insights, and analytics.
The 8x8 Technology Partner Ecosystem transforms customer experience and engagement by democratizing seamless, next-generation, native integrations for organizations of all sizes without requiring complex, custom development or exorbitant overhead costs that have traditionally only been feasible for the largest enterprises.
During the fiscal fourth quarter that ended March 31, 2023, EGHT’s total revenue increased 2% year-over-year to $184.53 million. Its total operating expenses decreased 18.4% year-over-year to $181 million. The company’s non-GAAP net income amounted to $12.67 million or $0.11 per share, rising 124.6% and 120% from the previous-year quarter.
EGHT’s EPS is expected to rise 39% from the year-ago quarter to $0.13 in the to-be-announced quarter that ended June 2023. Moreover, analysts expect EGHT’s EPS and revenue to increase 135.1% and 1.4% year-over-year to $0.12 and $189.91 million in the current quarter ending September 2023.
The stock has soared 37.3% over the past three months, closing the last trading session at $4.35. EGHT is also trading above its 50-day and 200-day moving averages of $3.96 and $4.22, indicating an uptrend.
It is no surprise that EGHT has an overall rating of B, which equates to a Buy in our proprietary rating system.
The stock also has an A grade for Value and a B for Growth. It is ranked #5 in the same industry.
In addition to the POWR Ratings stated above, one can also access EGHT’s additional ratings for Momentum, Stability, Sentiment, and Quality here.
What To Do Next?
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WIX shares were trading at $83.10 per share on Monday morning, down $0.52 (-0.62%). Year-to-date, WIX has gained 8.16%, versus a 19.61% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor's degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
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