When it comes to stocks in the internet space, the large-caps tend to get all the attention. However, there are plenty of small-caps worthy of your attention that have more upside.

Our POWR Ratings system has identified some of the most compelling small-cap stocks in this space. These stocks are undervalued with strong potential for earnings growth and multiple expansion in the coming years.

Below, we provide a look at two of the most intriguing small-cap internet retailers that have the potential to pop in the months ahead: iMedia Brands (IMBI) and Liquidity Services (LQDT).

iMedia Brands (IMBI)

IMBI is a media business based in Minneapolis that manages a portfolio of web service businesses and lifestyle TV networks. IMBI is currently trading merely a couple of dollars below its 52-week high of $9.52. The stock’s 52-week low is $1.38.

IMBI has an overall POWR Rating grade of B. The stock has an A grade in the Sentiment and Momentum components along with a B in the Value component. Investors who are curious as to how IMBI fares in the remaining POWR Rating components of Quality, Stability and Growth can find out by clicking here.

Of the 71 publicly traded companies in the Internet category, IMBI is ranked third. You can learn more about the stocks in the Internet space by clicking here.

The analysts love IMBI, setting an average target price of $16.33. If the stock were to reach this level, it would have increased by 108%. The highest target price for the stock is $19 while the lowest target price is $15. Of the three analysts who have issued recommendations for the stock, all three rate it as a Buy.

Liquidity Services (LQDT)

LQDT provides cutting-edge e-commerce solutions that help businesses and even governments manage, value, and turn over inventory as well as equipment. LQDT has an entire network of top e-commerce marketplaces that empower both buyers and sellers to participate in mutually beneficial transactions spanning more than 500 categories of products. The bulk of this environment is fully automated, ensuring superior service with the utmost efficiency. All in all, LQDT has more than 10,000 clients across the globe.

LQDT has a B POWR Rating grade. The stock has A grades in the Quality and Growth components along with Bs in the Momentum and Sentiment components. If you are curious as to how LQDT fares in the Value and Stability components, you can find out by clicking here.

Out of the 43 stocks on the Internet – Services category, LQDT is ranked fourth. You can find out more about the publicly traded companies in this space by clicking here.

The analysts are bullish on LQDT, setting an average target price of $21.50. If the stock were to reach this price, it would have popped by nearly 14%. The analysts’ high target price for the stock is $25 while the lowest target price is $18. Of the two analysts who have issued recommendations for the stock, one considers it a Strong Buy and the other considers it a Hold.

LQDT’s first-quarter earnings surpassed investor expectations, coming in at 17 cents per share. The company lost 12 cents per share in the same quarter one year ago. In fact, LQDT has delivered better than expected earnings in each of the past four quarters.

Perhaps the lone chink in LQDT’s armor is its somewhat high forward P/E ratio of 34.11. However, an elevated forward P/E ratio has not stopped investors from scooping up shares of internet stocks in the past so it probably won’t stop them now. LQDT just might keep on climbing higher and higher despite its slightly concerning valuation.

IMBI shares were trading at $7.17 per share on Thursday morning, down $0.27 (-3.63%). Year-to-date, IMBI has gained 50.00%, versus a 11.36% rise in the benchmark S&P 500 index during the same period.

About the Author: Patrick Ryan

Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...

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