Five Top Picks In The Internet Sector With Strongest Fundamentals

The companies with the best fundamentals among large-cap Internet stocks are Facebook ( FB ), Amazon.com ( AMZN ), Netflix ( NFLX ), Alphabet ( GOOGL ) and Priceline ( PCLN ), says RBC Capital Markets. Internet trends for these top five in their respective sectors — online advertising, retail and travel — remain very consistent, with strong revenue growth year over year, RBC said in a research report. Online advertising seems to be flowing en mass to Google-owner Alphabet and Facebook, with the two now accounting for close to 55% of global online advertising revenue, up from 50% three years ago, says the report from RBC analyst Mark Mahaney. And Amazon continues to show dramatically greater-than-average growth in the online retail sector. “We believe online retail demand trends have remained solid, particularly highlighted by Amazon’s retail sales acceleration,” Mahaney wrote. But, he said, “there’s little ad oxygen for the likes of Yahoo ( YHOO ).” Online travel remains a duopoly of Priceline and Expedia ( EXPE ), while it’s increasingly hard to see anyone catching up to Netflix in terms of video-streaming subscribers, he wrote. Though shares of Netflix have continued to decline following Q1’s weak international sub guidance and domestic price change worries, “We view the fundamental global subscriber growth story as intact,” Mahaney said. Mahaney has a price target on Netflix of 140. Netflix stock was trading near 89, up nearly 2%, in afternoon trading in the stock market today . The stock is down 20% since reporting first-quarter earnings on April 18, and it’s on the IBD Swing Trader list as a potential short-sale opportunity. He has a price target on Priceline of 1,600, as growth and profitability trends remain intact. Priceline stock was up a fraction near 1,279 Monday afternoon. Priceline is down 6% since reporting Q1 earnings on May 4. On Alphabet, Mahaney’s price target is 1,000, as it remains one of the best portfolio plays on the biggest Internet trends. Alphabet stock was near 727, up a fraction, Monday afternoon. The stock is down 7% since reporting Q1 earnings on April 21. On Facebook, the price target is 165, with Mahaney saying the social media company is firing on all cylinders. Facebook stock was near 118, down 1%, but it’s up 8% since reporting Q1 earnings on April 27. The price target on Amazon is 800. Amazon stock was flat, near 709. Still, it’s up 16% since reporting Q1 earnings on April 28. It also is on Swing Trader, but as a long possibility.

Facebook’s WhatsApp Tests Video Calls; Wireless Firms On Edge?

Facebook ’s ( FB ) WhatsApp is reportedly testing a new, free video calling feature, as both Facebook’s social networking platform and its messenger services like WhatsApp push further into communications. The video calling feature is being tested on a limited basis, says a  report  by tech new site The Verge. Facebook’s emerging video calling platform poses a challenge to Microsoft ‘s ( MSFT ) Skype, analysts say. Facebook’s relationships with wireless service providers have been touchy, although its social platform is a big driver of data consumption for U.S. wireless firms such as AT&T ( T ) and Verizon Communications ( VZ ) as well as other players globally. T-Mobile US ( TMUS ) in March shot down speculation it was working with Facebook on a “sponsored” plan that would exempt usage from monthly data caps. Facebook’s friction with wireless firms has been more apparent in emerging markets, such as Latin America. At the Mobile World Congress in Barcelona in February, Facebook CEO Mark Zuckerberg said the relationship between telecom carriers and  Facebook’s WhatsApp and Messenger is “symbiotic,” not hostile. Zuckerberg said that while “there might be tension in any relationship,” he sees greater use of photos and videos in messaging services as boosting data usage. In India, however, wireless firms Bharti Airtel and Vodafone Group ( VOD ) in early May asked regulators to stop phone calls made through mobile apps. Originally a text messaging service, WhatsApp rolled out free voice calling options to both Apple ( AAPL ) iOS and Android-based mobile phones last year. WhatsApp says it has 1 billion users worldwide. Facebook, though, hasn’t generated much revenue from WhatsApp, which it acquired in 2014 for $19 billion. Aside from WhatsApp, Facebook has taken other steps into communications. Facebook Messenger, a separate app, launched a group calling feature in April. Facebook has also expanded live video streaming to both Apple iPhones and Android software-based devices. Alphabet ’s ( GOOGL ) Google, meanwhile, is also active. Google has been working with Sprint ( S ), Deutsche Telekom ( DTEGY ), Vodafone and others to develop next-generation messaging technology based on a standard called Rich Communications Services, or RCS.

As Growth Investors Flee Apple, Warren Buffett Sees Value

Noted value investor Warren Buffett has picked up shares of Apple ( AAPL ) as growth investors have rotated out of the stock. Buffett disclosed in a regulatory filing Monday that Berkshire Hathaway ( BRKB ) bought 9.8 million shares of Apple, valued at $1.07 billion, at the end of the quarter. Buffett tends to focus on slower-growth companies that he believes are undervalued by the market, and he has not been a big tech investor. Meanwhile, hedge fund billionaire David Tepper has sold his stake in Apple, according to a filing with the SEC. Tepper previously held 1.26 million shares, last valued around $133 million, media reports said . On April 28, activist investor Carl Icahn said he had sold all of his shares in Apple. At one point, Icahn owned 53 million shares, or nearly 1% of the company. And Greenlight Capital’s David Einhorn also has been decreasing his stake in Apple. Drexel Hamilton analyst Brian White said Buffett’s Apple investment is a positive sign for the iPhone maker. “Although Buffett has admitted to not understanding technology, and thus avoiding the group for the most part (he also owns IBM ( IBM )), he is always on the lookout for a ‘wonderful company at a fair price,’ and we believe that is what he sees in Apple,” White said in a research report Monday. Investors soured on Apple after the Cupertino, Calif.-based company reported its first year-over-year sales decline since 2003 and its first-ever drop in iPhone unit sales in the March quarter. “In our view, Buffett’s investment in Apple speaks to a much bigger theme around the Apple story — the stock is meaningfully undervalued for such an excellent company with attractive long-term growth prospects,” White said. “In our view, the market gives Apple no credit for its expansive digital matrix across software, services and hardware that deliver a seamless experience for an installed base of 1 billion active devices.” Buffett also has confirmed that he could back a bid for Yahoo ( YHOO ) by Quicken Loans founder Dan Gilbert. Apple stock was up more than 3%, near 94, in midday trading on the stock market today . On Thursday, Apple stock fell to its lowest level in nearly two years, at 89.47. RELATED: Apple Gets Lift From China Ride-Hailing Service Investment .