Whether it be online shopping or social media, secular forces are propelling consumer internet businesses forward. But it’s not all sunshine and rainbows as consumer purchasing power can make or break demand. Unfortunately, the market seems to believe stormy skies are ahead as the industry has shed 9.9% over the past six months. This performance is a stark contrast from the S&P 500’s 8% gain.
Only some companies are subject to these dynamics, however, and a handful of high-quality businesses can deliver earnings growth in any environment. Taking that into account, here are three internet stocks we think can generate sustainable market-beating returns.
Meta (META)
Market Cap: $1.44 trillion
Famously founded by Mark Zuckerberg in his Harvard dorm, Meta Platforms (NASDAQ: META) operates a collection of the largest social networks in the world - Facebook, Instagram, WhatsApp, and Messenger, along with its metaverse focused Reality Labs.
Why Are We Bullish on META?
- Monetization efforts are paying off as its average revenue per user has grown by 27.1% annually over the last two years
- Healthy EBITDA margin of 61.8% shows it’s a well-run company with efficient processes, and its profits increased over the last few years as it scaled
- Share repurchases over the last three years enabled its annual earnings per share growth of 56% to outpace its revenue gains
Meta’s stock price of $600.45 implies a valuation ratio of 9.9x forward EV/EBITDA. Is now a good time to buy? Find out in our full research report, it’s free.
Robinhood (HOOD)
Market Cap: $83.05 billion
With a mission to democratize finance, Robinhood (NASDAQ: HOOD) is an online consumer finance platform known for its commission-free stock and crypto trading.
Why Will HOOD Outperform?
- Customer spending is rising as the company has focused on monetization over the last two years, leading to 143% annual growth in its average revenue per user
- Additional sales over the last three years increased its profitability as the 95.7% annual growth in its earnings per share outpaced its revenue
- Impressive free cash flow profitability enables the company to fund new investments or reward investors with share buybacks/dividends, and its improved cash conversion implies it’s becoming a less capital-intensive business
Robinhood is trading at $117.17 per share, or 35.8x forward EV/EBITDA. Is now the right time to buy? See for yourself in our in-depth research report, it’s free.
CarGurus (CARG)
Market Cap: $2.50 billion
Bringing transparency to a sometimes opaque process, CarGurus (NASDAQ: CARG) is a digital marketplace where auto dealers can connect with potential customers and where car buyers can browse, purchase, and obtain financing.
Why Could CARG Be a Winner?
- Platform is difficult to replicate at scale and leads to a best-in-class gross margin of 88.4%
- Earnings growth has trumped its peers over the last three years as its EPS has compounded at 32.5% annually
- Strong free cash flow margin of 26.5% enables it to reinvest or return capital consistently, and its expanding margin gives it even more flexibility
At $35.66 per share, CarGurus trades at 10.4x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full research report, it’s free.
Stocks We Like Even More
ALSO WORTH WATCHING: Top 5 Momentum Stocks. The best time to own a great stock is when the market is finally noticing it. These aren’t just high-quality businesses. Something is happening with them right now. Elite fundamentals meet near-term momentum — both boxes checked at the same time.
Find out which stocks our AI platform is flagging this week. See this week’s Strong Momentum stocks — FREE. Get Our Strong Momentum Stocks for Free HERE.
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
