Tuesday, June 19, 2012

3 Low-Debt Internet Stocks That Analysts Rate As Buys

Are you interested in internet companies that analysts rate as 'Buy'? Do you look for companies with low debt and that can manage their long term debt? If the answer is 'yes', here are some interesting ideas to get you started.

The Debt/Equity Ratio illustrates how aggressively a company is financing its growth via debt. The more debt financing that is used in a capital structure, the more volatile earnings can become, due to the additional interest expense. Should a company's potentially enhanced earnings fail to exceed the cost associated with debt financing over time, this can lead the company toward substantial trouble.

The Long Term Debt/Equity Ratio is a variation of the traditional debt-to-equity ratio; this value computes the proportion of a company's long-term debt compared to its available capital. By using this ratio, investors can identify the amount of leverage utilized by a specific company and compare it to others to help analyze the company's risk exposure. Generally, companies that finance a greater portion of their capital via debt are considered riskier than those with lower leverage ratios.

We first looked for internet stocks. We then looked for businesses that analysts rate as "Buy" (2 < mean recommendation < 3). From here, we then looked for companies that have maintained a sound capital structure (D/E Ratio<.3). We next screened for businesses that operate with little to no long term debt (Long Term D/E Ratio<.3). We did not screen out any market caps.

Do you think these stocks have what it takes to grow? Use our screened list as a starting point for your own analysis.

1) Google Inc. (GOOG)

Sector: Technology
Industry: Internet Information Providers
Market Cap: $195.75B
Beta: 1.06

Google Inc. has a Analysts' Rating of 1.80 and Debt/Equity Ratio of 0.09 and Long Term Debt/Equity Ratio of 0.05. The short interest was 1.37% as of 05/20/2012. Google Inc., a technology company, maintains an index of Web sites and other online content for users, advertisers, and Google network members and other content providers. It offers AdWords, an auction-based advertising program; AdSense program, which enables Web sites that are part of the Google Network to deliver ads from its AdWords advertisers; Google Display, a display advertising network that comprises the videos, text, images, and other interactive ads; DoubleClick Ad Exchange, a real-time auction marketplace for the trading of display ad space; and YouTube that provides video, interactive, and other ad formats for advertisers. The company also provides Google Mobile that optimizes Google's applications for mobile devices in browser and downloadable form, as well as enables advertisers to run search ad campaigns on mobile devices; and Google Local that provides local information on the Web.

2) Autobytel Inc. (ABTL)

Sector: Technology
Industry: Internet Information Providers
Market Cap: $34.81M
Beta: 1.33

Autobytel Inc. has a Analysts' Rating of 2.00 and Debt/Equity Ratio of 0.20 and Long Term Debt/Equity Ratio of 0.20. The short interest was 0.17% as of 05/20/2012. Autobytel Inc. operates as an automotive marketing services company in the United States. It assists automotive retail dealers and manufacturers to market and sell new and used vehicles to consumers through its online purchase request referrals, dealer marketing products and services, and online advertising programs and data products. The company provides vehicle purchase request programs, including new vehicle purchase request program, which allows consumers to submit requests for pricing and availability of specific makes and models; used vehicle purchase request program that allows consumers to search for used vehicles according to specific search parameters, such as the price, make, model, mileage, year, and location of the vehicle; and finance purchase request program designed to provide consumers the opportunity to obtain vehicle financing and other services from dealers or finance institutions.

3) InfoSpace, Inc. (INSP)

Sector: Technology
Industry: Internet Information Providers
Market Cap: $503.58M
Beta: 1.28

InfoSpace, Inc. has a Analysts' Rating of 2.30 and Debt/Equity Ratio of 0.22 and Long Term Debt/Equity Ratio of 0.20. The short interest was 3.62% as of 05/20/2012. InfoSpace, Inc. develops search tools and technologies that enable consumers to find content and information on the Internet. Its search solutions enable Internet users to locate and view content, information, merchants, individuals, and products online. The company offers search services directly to consumers through its Web sites, such as Dogpile.

*Company profiles were sourced from Finviz. Financial data was sourced from Yahoo Finance.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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