The POWR Industry Rank has a new sheriff in town and its name is Internet Stocks.
Yes, now sitting in the #1 rank spot out of 123 industries is the Internet group on the strength of an impressive earnings season. This has many of its most notable companies soaring above the pack this year. We will focus on 4 of the most impressive to show why there is still more upside ahead: Amazon.com (AMZN), Alphabet (GOOGL), MercadoLibre (MELI), and Netflix (NFLX).
AMZN famously topped out at $2,000 back in mid 2018 and has struggled ever since. That’s because Amazon was going through one of their large investing cycles that strips away profit in the short run to hopefully power ahead in the years to come. The benefit of these investments was showing up in spades in the recent 62% earnings beat that has AMZN back above $2,000 once again.
Wall Street analysts are falling over themselves in praise of Amazon’s quarter and what it means for growth prospects ahead. This also led to a parade of target price raises for AMZN. The average is $2,408, but there are a number of top rated analysts who see even greener pastures ahead. This includes 5 Star analyst Mark Mahaney of RBC Capital who believes that $2,700 is a more rightful destination for AMZN in 2020.
On the POWR Ratings front they are showing 4 Aces (plus one up the sleeve). Meaning that AMZN has A ratings across the board for Trade Grade, Buy & Hold Grade, Industry Rank, Peer Grade and the Composite Rating. Full AMZN ratings detail here.
There were a lot of eyes focused on GOOGL this earnings season given the surprising miss last quarter. Alphabet certainly didn’t disappoint as earnings came in 20% above estimates and shares sprinted to a new record high that has tripled the S&P return this year with a 13.4% gain.
Not everything was rosy in this report as some of GOOGL’s core business are showing cracks like search advertising and YouTube revenue. However, big bets on cloud computing and home assistance devices are starting to pay off. That’s why top analysts, like Laura Martin of Needham, sees $1,800 as the proper perch for GOOGL shares later this year.
GOOGL also scores big-time with the POWR Ratings because just like AMZN it has a bragworthy report card full of A’s. This is what gives the best hope that GOOGL will continue to outperform in the days and weeks ahead. Full GOOGL ratings detail here.
This is the least known of the stocks featured today. For simplicity people talk about MELI as being the eBay of Latin America. And with that comes some of the most impressive gains for investors over the years including:
+28.5% so far in 2020
+102.4% in the past year
+268.5% the past 3 years
+471.2% the past 5 years
Yes, past performance is not a guarantee of future results. That’s why we turn to the Wall Street analysts for insights on what lies ahead. The first thing that pops out is that MELI’s earnings prospects for the coming year jumped much higher after the report. James Friedman of Susquehanna is the most impressed by what he sees leading to a ratings upgrade and a street high $820 target. So all of this says that the impressive gains for MELI might not be over yet.
All of the MELI price momentum is getting swept up in their elevated POWR Ratings. Just like the predecessors above you will find a slew of A ratings. The only minor blemish is the B rating on the Peer Grade. Yet that is like complaining about some of the fading paint on the Mona Lisa. Full MELI ratings detail here.
For a while Netflix was pretty much the only game in town when it came to streaming online content. With that came exploding revenues, profits and share price. Since then the Streaming Wars have heated up with new entrants like Hulu, HBO Max, Amazon Prime, Disney Plus and soon Peacock from Comcast. This makes every quarter a dicey situation for NFLX depending on the # of net new subscribers added.
So all eyes were fixed on NFLX coming into their January 21st earnings announcement where they served up a 150% earnings beat with shares leaping higher once again. It wasn’t all rosy for Netflix with this announcement as the rate of new additions in the US is clearly decelerating. However, the international growth #s were impressive enough to get investors clamoring to bid up NFLX shares.
There are several top analysts who see $400+ for NFLX this year. But no one is pounding the table harder than Credit Suisse analyst Douglas Mitchelson who predicts $440 as fair value.
Momentum is clearly on NFLX side leading to full array of A’s for their POWR Ratings. It may be doubtful that Netflix can recreate the 471% gain of the past 5 years. But there is good reason to believe that shares will remain a timely investment this year. Full NFLX ratings detail here.
Want more great stock picks? Then check out these additional resources:
AMZN shares closed at $2,134.87 on Friday, down $-15.00 (-0.70%). Year-to-date, AMZN has gained 15.53%, versus a 4.89% rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|AMZN||Get Rating||Get Rating||Get Rating|
|GOOGL||Get Rating||Get Rating||Get Rating|
|MELI||Get Rating||Get Rating||Get Rating|
|NFLX||Get Rating||Get Rating||Get Rating|