3 Internet Stocks To Buy On The Dip

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Since the market bottomed in March 2020 during the worst of the coronavirus crisis, we’ve been in a powerful bull market, underpinned by low rates, fiscal stimulus, earnings growth, and an improving economy. Many stocks made extraordinary moves during the second half of 2020. However, over the past couple of months, there have been some subtle changes in the market environment, despite indices like the S&P 500 and Dow Jones Industrials continuing to trend higher. 

The most notable development has been the sharp sell-off in certain parts of the market, such as the tech sector and growth stocks, that were among the biggest winners of last year. Many of these stocks had high multiples and were among the frothier sectors which made them more vulnerable to weakness. 

Ultimately, this is a healthy development as the market digests these gains. And the market rotation is creating some fantastic opportunities to pick up high-quality stocks at a discount. I believe this is especially true for Internet stocks, especially since many companies in this industry posted strong earnings results recently. 3 Internet stocks that investors should consider buying are Facebook (FB)Cars.com (CARS), and Yelp (YELP).

Facebook (FB)

FB shares were under pressure earlier this year as many were concerned that the new privacy changes in Apple’s iOS14 would negatively impact Facebook’s ad business. While this is certainly a near-term headwind, it could be a blessing in the long term.

As a result, the company is pivoting to e-commerce. Currently, companies use Facebook to reach and engage customers but then sales are taken off the platform. Based on early experiments on Instagram, it seems that Facebook is creating tools to let vendors sell directly on its platform. This could increase conversions for businesses and margins for Facebook.

The upside on advertising revenue is limited, while there’s much greater capacity for growth when it comes to e-commerce revenue. This could signify another shift in Facebook’s evolution and mark its second growth phase.

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