Cape Town - Overberg Asset Management share analyst Kirk Swart looks at notable internet companies in this week's five shares to watch.
Alphabet is an American holding company that was founded as recently as 2015. Its founders are Larry Page and Sergey Brin, who are also the founders of Google. The company was founded to hold all of their subsidiary companies of which Google is the best known.
The company is exposed to various industries such as internet, IT, life sciences and investments. Most of the companies in the Alphabet stable originated at Google. For example, Google Ventures is now simply known as GV and Google Life Sciences became Verily.
Alphabet shares still trade under the ticker GOOG and can be bought on the NASDAQ. The share is trading at $813 per share.
In the early internet age Yahoo was one of the trendsetting companies. Founded in 1994 by Jerry Yang and David Filo, Yahoo has grown into a multibillion dollar company. The company delivers news-, email- and finance services and many more online interests for millions of customers globally. Yahoo also has the highest read news and media website worldwide with over 7 billion views per month.
Yahoo's search engine is facing very stiff competition from Google. Since 2014, Yahoo is working with Yelp to revive its search engine. Unfortunately, the partnership is yet to bear any fruit.
Despite the search engine woes, Yahoo's share price is trading at a one year high of $45 per share.
Apple, the world’s largest IT Company by revenue, sits with cash reserves of $246bn. This is just over 30% of their market capitalisation. Last year the market was spooked by the idea that Apple will never be able to launch a new product and that the cash won't be used efficiently.
The Apple share price fell to around $92. At $92 the share was very cheap and trading at a price to earnings ratio far below its historical average. Subsequently the share price recovered and is now trading at around $132.
Apple will look to grow the popularity of the Apple TV. Launched in 2006, the Apple TV has not really rivaled the major smart TV competitors. With Timothy D. Twerdahl, the former Head of Amazon's Fire TV unit recently joining Apple, expect the Apple TV to potentially grow market share.
Alibaba is a Chinese e-commerce company that specialises in online sales to businesses and consumers. It also provides clients with online payment services and cloud computing. The company was founded in 1999 and listed late 2014. Since the listing on the New York Stock Exchange (NYSE), the share price has been moving sideways for the most part. It opened trading at around $93 per share. Today it is trading at just over $102 per share.
Alibaba has a whole host of affiliate companies and partnerships. All of Alibaba's companies are creating an online marketplace where consumers can buy and sell online to users worldwide.
Facebook is one of the most well-known online social websites in the world. Started in 2004 by Mark Zuckerberg, the company has grown into a multibillion dollar company. Facebook released their results for the fourth quarter of 2016 recently. The results did beat analysts’ expectations with revenue coming in at $8.81bn for the quarter.
The biggest growth area for Facebook is advertising revenue. Advertising revenue grew a staggering 53%. It has to be taken into account that expenses grew by 30%, leaving net revenue to grow by 23%.
Facebook shareholders will be happy with the 32% return over the last rolling year. The share is trading on the NASDAQ at $134.
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*Kirk Swart is an analyst at Overberg Asset Management, an Authorised Financial Services Provider (No 783) which specialises in the private management of local and global discretionary portfolios as well as pension products.
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