3 Red-Hot Stocks to Acquire From a Prospering Internet Industry

Core Viewpoint - The Zacks Internet - Content industry is experiencing growth driven by strong demand for digital offerings, video content, and cloud-based applications, despite facing challenges from macroeconomic conditions and regulatory pressures [1][4][5]. Industry Overview - The industry includes providers of video encoding platforms, Internet content, staffing services, and online travel companies, with advertising as a major revenue source [2]. - Companies are expanding their digital presence across social media, display, connected TV, and search to attract customers [2]. Trends Influencing the Industry - There is a growing demand for digital offerings, with rapid technological changes and an expanding range of mobile and cloud-based services driving growth [3]. - Marketing efforts are focused on increasing website traffic, with advertising and subscriptions being key revenue sources [4]. Regulatory Environment - Increased regulatory pressures, particularly in China and the EU, are impacting industry participants, with regulations affecting direct advertising and data protection [5]. Industry Ranking and Performance - The Zacks Internet - Content industry holds a Zacks Industry Rank of 56, placing it in the top 23% of over 250 Zacks industries, indicating positive near-term prospects [6][7]. - The industry has underperformed compared to the S&P 500 and the broader technology sector, returning 21.6% over the past year compared to 33.4% and 38.4% respectively [10]. Valuation Metrics - The industry is currently trading at a trailing 12-month price-to-sales ratio of 32.14X, significantly higher than the S&P 500's 5.27X and the sector's 7.72X [11]. Company Highlights - Shutterstock (SSTK): Benefiting from strong demand for AI-generated content and the Envato acquisition, with a consensus estimate for 2025 earnings at $4.84 per share [13][14]. - **RELX**: Gaining from demand for Financial Crime Compliance and Digital Fraud Solutions, with a 4.3$1.68 per share [16][17]. - Genius Sports (GENI): Secured commercial terms with major U.S. sportsbooks, maintaining a consensus estimate for 2025 earnings at 1 cent per share [19].