The increased penetration of the Internet, combined with the adoption of work-from-home practices and the rising demand for services in sectors such as e-commerce, digital entertainment, online education, and telecommuting, are creating new avenues for the Internet industry worldwide. Further, continuous technological innovations are contributing to market growth.
Given the industry’s positive prospects, it could be ideal to invest in quality internet stocks Jamf Holding Corp. (JAMF), Upwork Inc. (UPWK), and TrueCar, Inc. (TRUE) which are currently trading under $20.
Growing digitalization, broad access to computers, modernization of countries, and rising smartphone utilization are driving significant growth in the Internet industry. With this, internet users continue to surge through the years. As of April 2024, there were 5.44 billion internet users worldwide, accounting for 67.1% of the global population.
Also, with over 94% of Americans having access to the internet, the United States ranks third among the largest online markets in the world, with over 311 million internet users nationwide. Amid technological innovation and the presence of the world's leading internet companies, the U.S. digital population has increased rapidly over two decades.
The number of internet users is expected to increase by 47% to 7.9 billion by 2029, mainly accelerated by new internet users from developing nations. This growth is propelled by the extension of mobile network coverage and the improving economic conditions, allowing access to a wider audience.
Besides, the global internet service market is projected to grow to $733.79 billion by 2031, exhibiting a CAGR of 4.4% during the forecast period. Rising demand in the service and commercial sector, trends of working from home, and the expanding penetration of online learning platforms are expected to fuel market growth.
Given the industry’s bright prospects, let’s delve into the fundamentals of the three best internet stocks: JAMF, UPWK, and TRUE.
Jamf Holding Corp. (JAMF)
JAMF offers a cloud software platform for Apple infrastructure and security platforms internationally. The company's product portfolio includes Jamf Pro, Jamf Now, Jamf School, and Jamf Connect. It also offers Jamf Protect, Jamf Business Plan, Jamf Safe Internet, Jamf Executive Threat Protection, and Jamf's education apps.
On March 7, JAMF and FTI Consulting, Inc. (FCN), a global business advisory firm, announced a strategic relationship to assist organizations worldwide in improving incident response capabilities regarding mobile device threats. Under the alliance, FTI will strengthen its cybersecurity offering with JAMF’s unique and market-leading security product, Jamf Executive Threat Protection.
The new offering will empower customers with confidence and strengthen their cybersecurity defenses against emerging threats.
JAMF’s total revenues increased 15.1% year-over-year to $152.12 million for the first quarter that ended March 31, 2024. Its non-GAAP gross profit grew 14.1% from the year-ago value to $123.66 million. The company’s non-GAAP operating income of $22.13 million indicates a growth of 265.4% from the prior year’s quarter.
In addition, the company’s non-GAAP net income came in at $18.89 million and $0.14 per share, up 209.7% and 180% year-over-year, respectively. Its adjusted EBITDA increased 201% year-over-year to $23.91 million.
Street expects JAMF’s revenue for the second quarter (ending June 2024) to increase 12.3% year-over-year to $151.67 million, and its EPS is expected to grow 170.9% year-over-year to $0.14 for the same quarter. Moreover, the company has surpassed the consensus EPS and revenue estimates in each of the trailing four quarters.
Over the past six months, JAMF’s stock has climbed 2.7% and 4.3% over the past year to close the last trading session at $17.73.
JAMF’s POWR Ratings reflect its robust outlook. 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, with each factor weighted to an optimal degree.
JAMF has a B grade for Sentiment and Growth. It is ranked #22 out of 52 stocks in the B-rated Internet industry.
In addition to the POWR Ratings we’ve stated above, we also have JAMF’s other ratings for Momentum, Value, Stability, and Quality. Get all JAMF ratings here.
Upwork Inc. (UPWK)
UPWK operates a work marketplace that connects businesses with various independent professionals and agencies internationally. The company's work marketplace allows access to talent with various skills across a range of categories, including administrative support, sales and marketing, design and creative, and customer service.
On April 30, UPWK introduced a collection of products, features, and partnerships to transform how businesses and professionals hire and work as part of Upwork Updates. This includes Uma, Upwork’s Mindful AI, which helps customers work smarter, introducing new resources for freelancers, access to expert global talent, and a new vendor management system (VMS).
On April 17, UPWK announced Upwork Partners, a new program for companies to establish partnerships with Upwork, highlighting skilled independent professionals on Upwork to serve their customers and connect freelancers with industry-leading tools. Upwork Partners encompasses three main partnership models: Upwork Partner Experts, Apps and Offers, and Partner Offers.
In terms of forward non-GAAP P/E, UPWK is trading at 13.16x, 31.7% lower than the industry average of 19.25x. Similarly, the stock’s forward EV/EBITDA multiple of 10.21 is 10.7% lower than the industry average of 11.44. Further, its forward EV/EBIT of 11.11x is 31.1% lower than the industry average of 16.11x.
For the first quarter that ended March 31, 2024, UPWK’s total revenue increased 18.7% year-over-year to $190.94 million. Its non-GAAP gross profit rose 21.8% year-over-year to $147.21 million. Its non-GAAP net income and EPS were $30.40 million and $0.22, against non-GAAP net loss of $734 thousand and $0.01 per share during the prior year’s quarter, respectively.
Furthermore, the company’s adjusted EBITDA and adjusted free cash flow were $33.32 million and $15.52 million for the quarter, respectively.
As per the company’s guidance for the second quarter of 2024, UPWK expects its revenue to be between $190 million and $195 million, representing a year-over-year increase of 14.2% at the midpoint. Its adjusted EBITDA is expected to be $32 million to $36 million and non-GAAP EPS to be $0.21 - $0.23.
For the full year 2024, the company expects revenue of $770 million - $782 million. It expects adjusted EBITDA to range from $140 million to $150 million and non-GAAP EPS to range from $0.88 to $0.92.
Analysts expect UPWK’s revenue for the second quarter (ending June 2024) to increase 14.5% year-over-year to $193.03 million. Its EPS for the same quarter is expected to grow 123.7% year-over-year to $0.22. Furthermore, UPWK has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
Shares of UPWK have surged 5.5% over the past month and 53.2% over the past year to close the last trading session at $12.33.
UPWK’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has an A grade for Growth. The stock also has a B grade for Value. UPWK is ranked #3 of 26 stocks in the Internet - Services industry.
Click here to access additional ratings of UPWK for Momentum, Sentiment, Quality, and Stability.
TrueCar, Inc. (TRUE)
TRUE operates as an internet-based information, technology, and communication services company. It runs its platform on the TrueCar website and mobile applications. The company's platform enables users to obtain market-based pricing data on new and used cars and connect with its network of TrueCar-certified dealers.
In terms of forward EV/Sales, TRUE is trading at 0.70x, 62% lower than the industry average of 1.85x. Likewise, the stock’s forward Price/Book multiple of 1.75 is 12.5% lower than the industry average of 2.00.
TRUE’s trailing-12-month gross profit margin of 90.14% is 83.3% higher than the respective industry average of 49.19%. Also, the stock’s trailing-12-month Capex/Sales of 6.46% is 81.3% higher than the industry average of 3.56%.
During the first quarter that ended March 31, 2024, TRUE’s revenue increased 11% year-over-year to $41.05 million. The company’s interest income came in at $1.64 million, up 2.2% from the prior year’s quarter. Its adjusted EBITDA was $936 thousand for the quarter.
Also, the company’s cash and cash equivalents and total assets totaled $133.69 million and $193.53 million as of March 31, 2024, respectively.
Street expects TRUE’s revenue for the second quarter (ending June 2024) to increase 12.8% year-over-year to $44.32 million. For the fiscal year 2024, the company’s revenue is expected to grow 14.4% year-over-year to $181.62 million. Furthermore, the company surpassed the consensus EPS estimates in all four trailing quarters.
Shares of TRUE have gained marginally over the past six months and 23.7% over the past year to close the last trading session at $2.77.
TRUE’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, translating to a Buy in our proprietary rating system.
TRUE has a B grade for Quality and Growth. It is ranked #4 among 26 stocks within the Internet - Services industry.
To access TRUE’s ratings for Value, Sentiment, Stability, and Momentum, click here.
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JAMF shares rose $0.07 (+0.39%) in premarket trading Wednesday. Year-to-date, JAMF has declined -1.38%, versus a 11.00% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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