3 Internet Stocks That Offer Value in a Pricey Market: Jon Erlichman

Tech stocks have surged, leaving fewer bargains for investors. But one of tech’s top analysts still sees a few internet names he believes are reasonably valued.

In the latest episode of Ticker Take, we spoke with Evercore’s Mark Mahaney, who has been covering internet stocks for more than 25 years. Mahaney notes we are now about three and a half years into a bull market, which means investors have to do more homework if they’re looking for good deals.

To find cheaper stocks, Mahaney looks at fundamentals to assess how AI is helping companies grow. He monitors top-line metrics like revenue and active users to see if businesses are reaching more customers. Revenue per employee is another simple tool he tracks. He also watches bottom-line performance to see if cost efficiencies are improving margins. AI, for example, may let companies hire less aggressively.

Using those methods, here are three stocks of companies with growth potential and reasonable valuations.

Amazon (AMZN)

Amazon is a core favorite on Wall Street, but it still trades below peers like Walmart and Costco. Its cloud business continues to grow, and the consumer business is steadily expanding. Operational improvements and efficiency gains give the company room to improve margins. That makes Amazon one of the more reasonably priced tech giants.

Expedia (EXPE)

Expedia is not always on investors’ radar, but Mahaney sees value in its management team and execution. Compared with competitors like Booking.com and Airbnb, Expedia shows steady growth potential while trading at a reasonable valuation. It is appealing in a market where many internet stocks look full-priced.

DoorDash (DASH)

DoorDash has expanded into grocery delivery and international markets, but the market has not fully rewarded these efforts. Mahaney notes its strong execution and growing scale. A recent pullback gives investors a chance to consider a company with solid fundamentals at a more attractive entry point.

The Ticker Take

Finding value in a late-cycle bull market requires discipline. Mahaney’s picks, Amazon, Expedia, and DoorDash, show that even when tech stocks broadly look expensive, some high-quality companies still trade at reasonable valuations.

Jon Erlichman is a BNN Bloomberg contributor and the host of Ticker Take on YouTube.