3 Top Internet Stocks to Power Your Portfolio Higher

The application of advanced technological solutions across several industries has been increasing at a rapid pace thanks to the ongoing, widespread industrial and social digital transformation. Because remote working is here to stay even in the post-pandemic environment, we think it is wise to bet on Dropbox (DBX), Box (BOX) and Shutterstock (SSTK). They offer solutions that facilitate remote working. Let’s discuss.

It’s no secret that the pace of digitalization has been accelerated by the COVID-19 pandemic. And because many  pandemic-driven trends are expected to continue even in the post-pandemic world, companies that facilitate remote working are expected to benefit this year and beyond. Internet-based service providers are expected to benefit from  increasing IT spending. According to Gartner, worldwide IT spending is expected to reach $4.1 trillion in 2021.

While it’s hard to predict how demand for these companies’ services will change post  pandemic, the resurgence of COVID-19 cases in several countries indicates that remote working will continue for the foreseeable future, which should bode well for these companies.

So, we think it is wise to bet on Dropbox, Inc. (DBX), Box, Inc. (BOX), and Shutterstock, Inc. (SSTK). We think their market dominance and consistent product innovation should help these companies thrive in the coming months.

Click here to check out our Software Industry Report for 2021

Dropbox, Inc. (DBX)

DBX is an online company that provides online file storage and sharing services. The company provides a Dropbox collaboration platform, which enables users to create, access, organize, share, collaborate and secure the content. It also allows its users to upgrade to a paid subscription plan for premium features.

The company’s revenue for the first quarter, ended March 31, stood at $511.60 million, which represents a 12% year-over-year increase. Its non-GAAP gross margin was 80.2% compared to 78.3% in the prior-year period, and its non-GAAP operating margin was 29.1% in the first quarter compared to 16.1% in the year-ago period. DBX’s non-GAAP net income increased 103.2% year-over-year to $141.80 million. Its non-GAAP EPS came in at $0.35, up 105.9% year-over-year.

For the quarter ending June 30, analysts expect DBX’s EPS to come in at $0.31, which represents a 40.9% year-over-year increase. It also surpassed consensus EPS estimates in each of the trailing four quarters. The company’s revenue is expected to increase 11.3% year-over-year to $517.65 million for the quarter ending June 30.

DBX completed the acquisition of DocSend on March 22. DocSend  is a secure document sharing and analytics company with more than 17,000 customers. The combination of DBX and DocSend is expected to help customers across industries manage end-to-end document workflows—from content collaboration to sharing and e-signature—giving them more control over their business administration.  The stock has gained 20.6% over the past year and closed yesterday’s trading session at $24.53.

It’s no surprise that DBX has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.

The stock has an A grade for Growth, and a B grade for Quality and Value. Click here to see DBX’s ratings for Momentum, Sentiment and Stability as well.

DBX is ranked #8 of 76 stocks in the Technology-Services industry.

Box, Inc. (BOX)

BOX provides an enterprise content management platform that enables organizations of all sizes to manage enterprise content, while allowing access and sharing of the content from anywhere on any device. It offers web, mobile and desktop applications for cloud content management on a platform for developing custom applications, as well as industry-specific capabilities.

For its fiscal year 2021 fourth quarter, ended January 31,  BOX’s total revenues came in at $198.91 million, indicating 8.3%  growth year-over-year. Its gross profit for the quarter increased 10.6% year-over-year to $140.31 million. The company’s cash flow from operations increased by 283.2% year-over-year to $57.54 million.

BOX’s  EPS for the quarter ended April 30 is expected to increase 70% year-over-year to $0.17. Also, BOX surpassed consensus EPS estimates in each of the trailing four quarters. Analysts expect its revenue to be $844.71 million in its fiscal year 2022, which represents a 9.6% year-over-year rise.

On May 5, Cisco Systems, Inc.’s (CSCO) Cisco Webex and BOX announced a new and deepened integration between the two technology platforms to make it easier for customers to work securely and effectively in the cloud. This is expected to increase its customer base. In addition,  users will be able to access Webex as a recommended app within BOX’s platform and view Webex app activity in the preview. The stock has rallied more than 30% over the past year and closed yesterday’s trading session at $20.74.

BOX’s POWR Ratings reflect this promising outlook. The stock has an overall A rating, which equates to Strong Buy in our POWR Ratings system. It has a B grade for Growth, Value and Quality. In addition , one can see Box’s ratings for Stability, Sentiment and Momentum here.

BOX is ranked #2 in the Technology – Services industry.

Shutterstock, Inc. (SSTK)

Technology company SSTK operates a two-sided marketplace for professionals to license content. It offers image services consisting of photographs, vectors, and illustrations, which is used in visual communications. The company serves marketing professionals and organizations, media and broadcast companies, and small and medium-sized businesses through its online platform.

SSTK’s revenue for the first quarter ended March 31, increased 14% year-over-year to $183.30 million. The company’s operating income stood at $38.10 million, up 559% year-over-year. Its net income for the quarter stood at $29.50 million, which represents a 584% year-over-year rise. Its EPS increased 17.9% year-over-year to $0.79.

Analysts expect SSTK’s EPS and revenue to increase 12.9% and 12.7%, respectively, year-over-year to $0.70 and $179.45 million for the current quarter, ending June 30. Also, , SSTK surpassed consensus EPS estimates in each of the trailing four quarters.

SSTK announced an API integration with Alphabet Inc.’s (GOOGL) Google Drive in April for Enterprise, a cloud-based file storage solution for businesses. Through this integration, the company’s Enterprise customers can automatically sync previously licensed and newly licensed creative images directly with Google Drive for Enterprise. This new facility is expected to be helpful for SSTK’s customers and drive more sales. The stock has surged 125.8% over the past year to close yesterday’s trading session at $84.20.

SSTK’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. It has a B grade for Value, Sentiment and Quality also. Click here to see the additional POWR Ratings for SSTK (Momentum, Growth and Stability).

SSTK is ranked #1 of 43 stocks in the Internet- Services industry.

Click here to check out our Software Industry Report for 2021

DBX shares were trading at $25.14 per share on Friday afternoon, up $0.61 (+2.49%). Year-to-date, DBX has gained 13.29%, versus a 13.11% rise in the benchmark S&P 500 index during the same period.

About the Author: Ananyo Guha Niyogi

Ananyo’s ardent interest in capital markets, wealth management, and financial regulatory issues, led him to a career as an investment analyst. His goal is to educate individual investors by making complex financial issues easy to understand.


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