4 Growing Internet Stocks With Little Debt

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 |  Includes: AWAY, GRPN, SFLY, TZOO
by: ZetaKap

Interested in gaining exposure to Internet companies? In search of companies that can manage their debt well? Do you prefer companies that can manage their long-term debt? Do you prefer stocks with high projected earnings over the long term? For ideas on how to start your search, we ran a screen you may find helpful.

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.

EPS growth (earnings per share growth) illustrates the growth of earnings per share over time. The Five-Year Expected EPS Growth Rate is a long-term annual growth estimate, where the growth projections are made by analysts, the company or other credible sources.

We first looked for Internet stocks. We then looked for businesses that operate with little to no debt (D/E Ratio < 0.3). We next screened for businesses that operate with little to no long-term debt (Long-Term D/E Ratio < 0.1). We then screened for businesses that have high future earnings per share growth forecasts (Five-Year Projected EPS Growth Rate > 25%). We did not screen out any market caps.

Do you think these stocks should be trading higher? Use our list along with your own analysis.

1. Shutterfly (NASDAQ:SFLY)

Sector: Technology
Industry: Internet Information Providers
Market Cap: $951.22M
Beta: 1.43
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Shutterfly has a Debt/Equity Ratio of 0.00, a Long-Term Debt/Equity Ratio of 0.00, and a Five-Year Projected Earnings Per Share Growth Rate of 30.13%. The short interest was 23.66% as of May 24, 2012. Shutterfly provides an Internet-based social expression and personal publishing service that enables consumers to share, print, and preserve their digital photos through the medium of photography in the United States. It offers a range of personalized photo-based products and services for consumers to upload, edit, enhance, organize, find, share, create, print, and preserve their memories. The company produces and sells photo books, greeting and stationery cards, personalized calendars, and other photo-based merchandise, including calendars, mugs, canvas prints, mouse pads, magnets, and puzzles.

2. Groupon (NASDAQ:GRPN)

Sector: Technology
Industry: Internet Information Providers
Market Cap: $6.42B
Beta: -
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Groupon has a Debt/Equity Ratio of 0.00, a Long-Term Debt/Equity Ratio of 0.00, and a Five-Year Projected Earnings Per Share Growth Rate of 28.80%. The short interest was 4.91% as of May 14, 2012. Groupon, together with its subsidiaries, operates as a local commerce marketplace that connects merchants to consumers by offering goods and services at a discount in North America and internationally. The company sends daily emails to its subscribers regarding discounted offers for goods and services that are targeted by location and personal preferences. Consumers also access its deals directly through the company's websites and mobile applications.

3. HomeAway (NASDAQ:AWAY)

Sector: Technology
Industry: Internet Information Providers
Market Cap: $2.08B
Beta: -
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HomeAway has a Debt/Equity Ratio of 0.00, a Long-Term Debt/Equity Ratio of 0.00, and a Five-Year Projected Earnings Per Share Growth Rate of 32.75%. The short interest was 11.79% as of May 14, 2012. HomeAway, together with its subsidiaries, operates an online marketplace for the vacation rental industry worldwide. Its vacation rental properties consist of homes, condominiums, villas, and cabins available to the public on a nightly, weekly or monthly basis. The company's online vacation rental property marketplace enables property owners and managers to market properties available for rental to vacation travelers who rely on its websites to search for and find available properties.

4. Travelzoo (NASDAQ:TZOO)

Sector: Technology
Industry: Internet Information Providers
Market Cap: $387.19M
Beta: 1.93
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Travelzoo has a Debt/Equity Ratio of 0.00, a Long-Term Debt/Equity Ratio of 0.00, and a Five-Year Projected Earnings Per Share Growth Rate of 29.93%. The short interest was 74.23% as of May 14, 2012. Travelzoo, an Internet media company, together with its subsidiaries, publishes travel and entertainment deals from travel and entertainment companies and local businesses in North America and Europe. Its publications and products include the Travelzoo websites.

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.