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You Larry yeah.
Internet stocks seeing a good first half of the year with Google hitting its all time high this man Amazon reaching a peak today so -- expect this run up to continue in the second half of this year.
Joining us now with his second half set up for the Internet sector is mark -- -- managing director -- analyst for RBC capital markets.
We we started each one of these segments marked by looking back at least to the first half and seen how these names have done and then comparing it -- you believe they will do but.
Is appropriate question but -- -- in the middle of the year.
Oh heck yeah I look I get your point there's a little bit of arbitrariness of behind that.
We've seen they have very now for the most part out of the Internet sector out of a large cap Internet sector we've seen for the most part very good stock performance year to date one it's been better than that of the market as a whole.
A lot of these stocks actually are now heating up against our price -- so -- -- from being strong advice to small buys and we still like some of these assets.
Okay what is it about them and then there are many different ways of looking at these you can look at the spotter technology.
Index or you can look at Internet.
Numbers and see how they do is it fair to mix up the Amazon's of the world with.
Technology stocks like Intel.
That there's some very different elements to these models -- at online advertising models online retail models online travel models are all mostly consumer oriented maybe the exception of Lincoln but almost all from our consumer oriented so they are playoff consumer discretionary spend -- also a playoff -- big secular shift of almost all things online and in a couple of these companies have very specific drivers either toppled mobile -- a case of Amazon there's a new push in the groceries so there are some -- specific factors here to make it hard to compare with broad tech companies by -- gets -- picks if we can you picking Priceline I mean this is the stock was already be -- there it's up what.
Year to -- do you think is still has room to grow.
Yeah you're you're right and it's the stock has had a big a big run up look we're -- very enthusiastic about the stock beginning of the year.
That -- -- it has to taper off a little bit we're not we're close to an all time high on the stock which was last -- by the way.
Back in 992000.
So it's been a long -- a long round trip for this for this name.
But the execution has been very good I'd say over the last five to seven years.
We think they're still upside the account for perhaps 10% of global hotel room nights sold worldwide.
To just keep that in mind we think that that market share can continue to grow.
High margin business generates a lot of cash -- like did we think is one of the best management teams in the space we continue to like the stock.
Well -- eat it sounds like you -- the real leadership names in the in each area and so that that would mean we need to get to Amazon because it has been that.
The stall wart and the shining star in the business that it doesn't now they're expanding into other things that really have caught your high the stock is already -- about 32% over the past year.
On top of that though it still has a price to earnings ratio that seems awfully -- about ninety.
-- you're actually right listen and you set it up correctly to -- -- the best way to play had a growth -- online travel.
Google's the best way to play the growth -- online advertising and Amazon's best way to play the growth enough online retail plus also Amazon is also surprise people including myself with some of these newer initiatives.
They're really really taken hold like Amazon Web Services these Kindle devices.
Those probably -- top was also advertising revenue the companies now generating look at PE multiple is extremely high it requires very high growth.
Assumptions in this for this business we think this is actually the most attractive stock from -- just a -- growth perspective over the next five years.
Yes I -- greater valuation risk with -- because some.
The smartest people in the room it just struck that deal with Viacom -- they swept in just to get their -- there have some video streaming assets.
Dora the Explorer things like that in the Amazon prime relationship so they they're doing things that broaden their business in ways that seem logical.
The only risk that's implied that statement is maybe they're spreading themselves too thin and I I worry about that is as somebody who looks quite focus on that as one of the risks with the stock but so far.
They've shown an uncanny ability to get about 80% of their investments right.
Interest thing also.
-- -- Netflix -- -- that so pop over a 160%.
A year today it's is it too late to get in all -- -- I don't think it's too late but it's a little further down our list as open when -- -- -- the more controversial names mean FaceBook would be an air Netflix would be in their two.
I think that Netflix has -- what I would call escape velocity in US.
They are now more subscribers they have more entertainment video subscribers and any other service in the PBS -- works of fox etc.
And it said that they've they've become.
One of the US itself will reach forty million within two years.
Impressive all right mark -- any obviously capital markets analyst mark thanks so much for joining us.
-- -- having me.
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