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4 Best Internet Stocks for New Investors

Originally published on Best Stocks

Category: best stocks to buy now

Investors love the Internet. After all, who wouldn’t want to invest in companies that sell cool online apps and services? Yet while everyone knows about Amazon, Google, and Netflix, investing in Internet stocks can be tricky for new investors. With so much red tape involved in investing directly into an individual stock and the potential risk of a company going bankrupt, we think new investors should avoid direct investment into Internet stocks until they have built up some cash reserves and gained more experience. That said, there are still plenty of great investment opportunities out there. Keep reading if you’re looking for the best Internet stocks for new investors.

Revolve Group (RVLV)

Revolve Group is probably your best bet if you want to invest in online clothing retailers. After all, it’s projected to increase its sales by a whopping 51% this year, making it much more attractive than other online clothing retailers like Shopify (SHOP) and Asos (ASOS). Why the difference? Revolve Group is unique because it doesn’t operate its own retail website. Instead, it works with other retailers to build its online presence. Revolve Group runs most of the back-end services of these websites, including inventory management, customer service, and marketing. Outsourcing these services makes its clients’ websites function more efficiently and makes Revolve Group’s operation cheaper, allowing it to pass these cost savings on to its customers. This strategy has proven to be hugely successful for Revolve Group. It has partnered with Kylie Jenner and Kylie Cosmetics, American Eagle Outfitters, and Levi’s, among many others. It has reported strong revenue growth and profit margins since going public in 2017. Revolve Group might not be a household name yet, but it’s a smart investment for any new Internet stock investor.

Shutterstock (SSTK)

Shutterstock is one of the biggest names in stock photography, with the ability to help you find the perfect image for your blog, presentation, or advertisement. However, like Revolve Group, its business model differs from most other Internet companies: Unlike Instagram, it doesn’t rely on advertising revenue or selling users’ data. Instead, its business model is subscription-based, with customers paying either per image or via a monthly subscription. Since its customers are businesses rather than individuals, Shutterstock has an extremely high-profit margin, which has led to healthy growth in revenues and earnings over the past few years. Moreover, Shutterstock’s future is looking even brighter. Demand for stock photography has only increased as more businesses embrace the digital era and need helpful images for everything from advertisements to presentations. The one downside to investing in Shutterstock is its higher-than-average price tag. It has a market cap of over $7 billion, more than five times that of Revolve Group, with less than double the sales. That said, Shutterstock’s higher price tag signifies its stronger business model.

Coupang (CPNG)

Coupang is the South Korean version of Amazon but has some key differences. Coupang is more of a marketplace for third-party sellers than an inventory-based retailer. This helps drive down costs, which allows Coupang to offer lower prices than Amazon. It also speaks to its focus on the Asian market, which is expected to account for a larger share of e-commerce in the coming years. Coupang has already been extremely successful in its home country, expanding to other Asian countries such as Thailand and Indonesia. With a strong foothold in the region and a strong brand name, Coupang is expected to continue to grow quickly. The only downside to this investment is that Coupang is not yet profitable. It has been burning cash to fund its expansion, and it doesn’t expect to be profitable until 2021. However, if you’re willing to wait and take on a bit more risk, Coupang could be the perfect investment.

ShockWave Medical (SWAV)

Like many Internet stocks, ShockWave Medical’s website is hard to read and decipher, but it is a solid investment opportunity for new investors. ShockWave Medical is a medical device company specializing in developing new uses for low-level shockwave therapy (LST). LST is a non-invasive treatment that uses acoustic pressure waves to treat various soft tissue injuries, including tennis elbow and plantar fasciitis. While LST is not a new technology, ShockWave Medical has created devices that are smaller and more efficient than ever before, and it has launched several clinical trials to test them out. If these trials are successful and the company receives FDA approval, ShockWave Medical could see a huge jump in sales, with the potential for strong profit margins. There are some risks involved in investing in ShockWave Medical. The stock is extremely volatile and often sees large swings in trading prices. It is also very thinly traded, meaning it can be difficult to buy and sell. However, these risks are offset by the potential for a large return.

Conclusion

Regarding Internet stocks, there are many different companies to choose from. We think these are some of the best options for new investors, particularly because they all have low volatility compared to other Internet companies. We strongly suggest avoiding IPOs, as they tend to be riskier and less predictable than established stocks.

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