1 Internet Stock on Our Buy List and 2 to Be Wary Of

Whether it be online shopping or social media, secular forces are propelling consumer internet businesses forward. Luckily for them, the market seems to believe there is still more growth ahead. This assumption has enabled the industry to fair a bit better than the broader market recently as it has recorded a loss of 5.3% over the past six months versus a 8.1% decline for the S&P 500.

However, long-term winners that can stand the test of time are rare in this space because competition is fierce with many well-capitalized companies. Taking that into account, here is one resilient internet stock at the top of our wish list and two that may face trouble.

Two Consumer Internet Stocks to Sell:

Angi (ANGI)

Market Cap: $659.5 million

Created by IAC’s mergers of Angie’s List and HomeAdvisor, ANGI (NASDAQ: ANGI) operates the largest online marketplace for home services in the US.

Why Does ANGI Give Us Pause?

1. Service Requests have declined by 23.3% annually over the last two years, suggesting it may need to revamp its features or user experience to stay competitive
2. Forecasted revenue decline of 13% for the upcoming 12 months implies demand will fall even further
3. Excessive marketing spend signals little organic demand and traction for its platform

Angi is trading at $12.80 per share, or 51.4x forward EV-to-EBITDA. Read our free research report to see why you should think twice about including ANGI in your portfolio.

Roku (ROKU)

Market Cap: $8.79 billion

Spun out from Netflix, Roku (NASDAQ: ROKU) makes hardware players that offer access to various online streaming TV services.

Why Do We Think Twice About ROKU?

1. Preference for prioritizing user growth over monetization has led to 2.4% annual drops in its average revenue per user
2. EBITDA margin fell by 10.5 percentage points over the last few years as it prioritized growth over profits
3. Earnings per share fell by 32.8% annually over the last three years while its revenue grew, showing its incremental sales were much less profitable

At $57.76 per share, Roku trades at 30.2x forward EV-to-EBITDA. If you’re considering ROKU for your portfolio, see our FREE research report to learn more.

One Consumer Internet Stock to Buy:

ACV Auctions (ACVA)

Market Cap: $2.29 billion

Founded in 2014, ACV Auctions (NASDAQ:ACVA) is an online auction marketplace for car dealers and wholesalers to buy and sell used cars.

Why Will ACVA Beat the Market?

1. Marketplace Units are rising, meaning the company can increase revenue without incurring additional customer acquisition costs if it can cross-sell additional products and features
2. EBITDA margin expanded by 16.7 percentage points over the last few years as it scaled and became more efficient
3. Earnings growth has massively outpaced its peers over the last three years as its EPS has compounded at 28.1% annually

ACV Auctions’s stock price of $13.25 implies a valuation ratio of 27.2x forward EV-to-EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.

Stocks We Like Even More

Donald Trump’s victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs.

While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years.

Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like United Rentals (+322% five-year return). Find your next big winner with StockStory today for free.