3 Cheap Internet Service Stocks

With the recent market volatility, many people have seen their investments take a big hit as more and more negative international news stifles any potential breakouts.  While indications are pointing to a potential market correction, or even an earnings recession in the near term, it would make sense to look for stocks that have a limited downside with large potential upside growth possibilities.  

One sector that is in the top 16th percentile of all 257 sectors, and has several inexpensive growth companies is the Internet Service Delivery sector.  The internet service sector marries retail and advanced computer technology.  This can range from retail websites that have thousands of items, to a job recruiting site that utilizes advanced technology to match the best job for each candidate.  These internet advances streamline functionality and intelligent search options.  And as the world moves more and more into cyberspace for almost every want and need, the internet service sector is a growing to meet those needs.

Stocks To Consider

Even though there are increasing worries about the Chinese growth levels, there is one such internet service delivery company that is growing during these volatile times – Vipshop Holdings (VIPS – Snapshot Report).  Vipshop is a leading online discount retailer for brands in China. The Company offers high quality and popular branded products to consumers throughout China at a significant discount from retail prices. As compared to conventional on-line marketplaces or large-scale multi-category online retailers, Vipshop has successfully created and proven there is a third e-commerce model that can provide tremendous scale and profitability. The Company has pioneered the online discount retail model in China and become the expert and leader.

Over the past seven quarters, this Zacks Ranked #2 (Buy) company has met or exceeded the Zacks Consensus Earnings Estimate, and has beaten the Zacks Consensus Revenue Estimate.  Specifically, in their most recent quarter, Vipshop’s revenue growth was 77.6% y/y, and non-GAAP operating income grew 113% y/y.  Also, management’s guidance for Q3 15 is expecting revenues to grow 71% y/y!

As you can see from the graph below, expectations for 2016 are almost double the current price.