Net stocks trending up

People are using more information than ever before. What types of companies will find new growth opportunities in this rapidly changing ecosystem? The challenge is not just in understanding the technology, but also the fundamental shifts in human communication behaviour.

Driven by high broadband penetration, maturing “social software” and affordable Internet-enabled multimedia devices, the companies whose sites and services are making inroads with enthusiastic users will prosper. These companies also capture the attention of advertisers; use social media to reach their customers; build brand loyalty; and communicate with geographically dispersed customers, employees, suppliers and partners.

The so-called “Net Generation,” composed of “digital natives” who have grown up in a technology-enabled environment, is at the forefront of this phenomenon. Websites aggressively compete for these customers — and for advertising revenue streams such as real estate, employment and automotive, in addition to direct sales of products. Whether through internal development programs, acquisitions, or partnerships, only companies who explore new opportunities in content development, information, communications, and audience generation will keep expanding.

These long-term shifts in online commerce, information products, and communication trends, require bold, significant corporate strategic plans. The option of doing nothing is not a luxury many companies can afford, as revenues from traditional services decline and highly resourceful Internet information providers claim an increasingly larger market share of each market they enter.

There are numerous areas of focus within the Internet Information Providers sector. Which stocks in this sector have the greatest opportunities for success?

Companies have set their eyes on the Chinese Internet market, which seems like a potentially lucrative opportunity. The growing affluence of the China’s middle-class has increased consumption of digital media and data. However, operations in the Chinese market can be quite difficult due to the unpredictable interference of the Chinese government.

Another key growing market is found with people who want to save money on travel, and have greatly increased their time on the Internet doing copious amounts of online bargain hunting.

Content delivery companies have been considering new strategies due to fierce competition as telecom companies expand their networks. Also, while recent hacking scandals create apprehension about cloud computing, they also create increasing demand for network security solutions.

We have identified the Internet Information Providers industry group as being in an uptrend, and SmarTrend has identified significant returns from several Internet companies in this sector.

EXPE (Expedia, Inc.), together with its subsidiaries, operates as an online travel company in the United States and internationally. EXPE is in an Uptrend called by SmarTrend on March 30, 2011 at $22.45. With a price of $30.26 in late July, this stock has increased 34% since SmarTrend’s Uptrend Alert was issued.

SINA (Sina Corporation) provides online media and mobile value-added services in the People’s Republic of China. It provides advertising, non-advertising, and free services through SINA.com. The company’s microblogging platform, Weibo.com, enables users to follow the hottest online topics, as well as discussions related to people they know. SmarTrend identified the Uptrend for SINA on June 22, 2011 at $89.10, and with the stock trading in late July at $117.17, the return to date has been 31%.

LQDT (Liquidity Services, Inc.) operates an online auction marketplace for surplus and salvage assets that comprises approximately 500 product categories.

Its online auction marketplaces include liquidation.com; govliquidation.com; govliquidation.com; and liquibiz.com. The company also operates a wholesale industry portal, goWholesale.com. LQDT closed in late July at $25.28, an increase of 52% since SmarTrend issued an alert on its Uptrend on March 25, 2011 at $16.56.