After a lackluster year, internet stocks and sector-related exchange traded funds look attractive with a better growth outlook.
FBN Securities’ Shebly Seyrafi believes internet names “should start to work this year,” reports Teresa Rivas for Barron’s.
Seyrafi argues taht while Google (NasdaqGS: GOOGL) may look extended over the short-term, the company’s valuations remain inexpensive. Additionally, Amazon (NasdaqGS: AMZN) appears attractive as well, given the company’s international profit growth and Amazon Web Services. He was also positive on social media names like Twitter (NasdaqGS: TWTR), LinkedIn (NYSE: LNKD) and Facebook (NasdaqGS: FB).
Investors interested in internet names can also consider a broad ETF to gain broad exposure to the space. For instance, the PowerShares NASDAQ Internet Portfolio (NasdaqGS: PNQI) includes a 8.8% tilt toward Amazon, about 16% in Google and 8% in Facebook. The First Trust Dow Jones Internet Index Fund (NYSEArca: FDN) has 8.2% in Amazon, 7.9% in Facebook, about 10% in Googlem 4.1% in LinkedIn and 4.0% in Twitter. [Investors Rotate Into Growth-Oriented Tech Stocks, ETFs]
FBN Securities is also positive on security stocks, like Palo Alto Networks (NasdaqGS: PANW), Fortinet (NasdaqGS: FTNT), CheckPoint (NasdaqGS: CHKP) and Fireye (NasdaqGS: FEYE).
The PureFunds ISE Cyber Security ETF (NYSEArca: HACK) covers the information security space with 5.4% FEYE, 4.4% in PANW, 4.4% in FTNT and 3.9% in CheckPoint.
eBay (NasdaqGS: EBAY), which makes up 5.6% of FDN and 8.7% of PNQI, has also been strengthening after its PayPal unit acquired Israeli cyber security company CyActive in an attempt to shore up the online payment service provider’s security credentials, reports Tony Owusu for TheStreet.
The massive data breach in Corporate America, such as the recent fiasco at health insurer Anthem (NYSE: ANTM), has helped create greater awareness for cybersecurity and fuel investments into information security companies. HACK has increased 7.7% year-to-date. [JPMorgan’s War on Hackers Bodes Well for Cyber Security ETF]
For more information on the tech sector, visit our technology category.
Max Chen contributed to this article.