Harriet Lefton

About the Author Harriet Lefton

Harriet originates from the UK where she worked as a journalist specializing in the metal markets. She graduated from the University of Cambridge before becoming a qualified UK lawyer.

2 ‘Disruptive’ Internet Stocks to Buy: Facebook Inc (FB), Amazon.com, Inc. (AMZN)

These 2 game-changing internet stocks are making others jittery right now.


Today, I am going to focus in on two particularly compelling internet stocks to share with you: Amazon.com, Inc. (NASDAQ:AMZN) and Facebook, Inc (NASDAQ:FB). These are stocks that have the power to disrupt — and have significant backing from the Street. All these stocks have a ‘Strong Buy’ rating from the best-performing analysts on TipRanks and big upside potential from the current share price.

‘Strong Buy’ Disruptive Stocks: Amazon.com, Inc.

Amazon is arguably the Street’s number 1 stock right now, and the ultimate disruptor of various industries.

Recently, Amazon held its much-hyped cloud conference AWS re:Invent 2017 in Las Vegas. The company unveiled a whole host of new AI-based products- including Amazon Translate, a service for translating text from one language into another. Andy Jassy, the leader of Amazon Web Services, also highlighted how AWS is crushing its rivals in its breadth and depth of services.

Following the five-day event, analysts quickly ramped up their price targets. Top Wells Fargo analyst Ken Sena boosted his price target from $1,430 to $1,525. The new price target indicates 31% upside and is the stock’s highest price target yet. He highlighted three key reasons to be bullish on AMZN right now: 1) the “very successful” AWS event 2) “record breaking” holiday sales data; and 3) the increasing likelihood that Amazon “ultimately becomes a disruptor” in healthcare via the generic pharmaceutical business.

Meanwhile MKM Partners’ Rob Sanderson reiterated his view that Amazon represents “the best long-term growth story available to large-cap investors today.” He expects continued expansion from Amazon’s AWS cloud business over the coming quarters.

In the last three months, AMZN has received an incredible 33 buy ratings and just 1 hold rating. The average analyst price target of $1,271 suggests upside potential of 9.4%.

Bear in mind that in just three months, AMZN has already spiked from $965 to the current share price of $1,162.

‘Strong Buy’ Disruptive Stocks: Facebook Inc

Five-star Evercore analyst Anthony DiClemente believes Facebook can lead big tech stocks higher in 2018. Part of the reason for this is the fact that these companies remain game changers: “Today’s leading tech companies are leveraging the internet to disrupt and take profits from large established industries, a dynamic that is driving real earnings and free cash flow growth.”

He singles out FB as a prime example of this trend. Facebook has experienced massive growth over the last few years. “Between 2013 and 2017, the share of web traffic coming via Facebook has grown five-fold to exceed 40 percent” points out DiClemente. But it is Facebook’s photo sharing app Instagram that is raising eyebrows right now: “Perhaps the most striking dynamic within social media is the incredible growth of Instagram over the past three years. Based on the company’s disclosure in late September, Instagram’s user base now stands at 800 million.”

The social media giant is now looking to leverage these numbers with online video creation. Indeed, the company has already launched the Watch tab for original video content. Top Morgan Stanley analyst Brian Nowak sees Facebook making $565 million in revenue from the “Watch” tab video in 2018, on spending of $400 million. The Wall Street Journal says Facebook plans to splurge $1 billion on producing original video content.

Overall, in the last three months, the stock has received an impressive 28 buy ratings, one hold rating and one sell rating. From the current share price of $176, analysts believe (on average) that FB can still soar by 16% to hit $209.

 

Disclaimer: The author has no position or business relationship in any stock or company mentioned in this article, and he has no plans to initiate. The author is not receiving compensation for this article expect from Smarter Analyst. This article is intended for informational and entertainment use only, and should not be construed as professional investment advice.

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