Looking for some safe Internet stocks that could weather a recession storm? RBC Capital Markets analyst Jordan Rohan has five companies that could "GLAM" up a bearish market.
A pair of large cap companies – Amazon.com Inc. (NASDAQ:AMZN) and Google Inc. (NASDAQ:GOOG), respectively – as well as three small-to-medium cap companies – Gmarket Inc. (GMKT), Liquidity Services Inc. (NASDAQ:LQDT) and MDC Partners Inc. (NASDAQ:MDCA) – are all attractive picks in case the U.S. economy enters a recession or period of stagflation.
Some of those small-cap companies sound unfamiliar? It's easy to miss those names when Google and Amazon hog the headlines, but they all share five characteristics that money managers should keep in mind when making long-term investments:
1. High percentage of international or otherwise uncorrelated revenues
2. Gaining market share regardless of economic backdrop
3. Abundant opportunities for margin enhancement
4. Defensible valuation compared with growth and comparables
5. Seasonal or cyclical catalysts for near-term outperformance
"Over the last 5 years, Internet business models have benefited from the increase in Internet users, the increased penetration of broadband in the U.S., and the acceptance of the Internet as a primary marketing channel," said Mr. Rohan.
"In our view, the headwind generated by those secular growth trends has become much gentler. Within that context, market share gainers tend to outperform significantly, as do those companies with a strong international presence."