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 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 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.