Internet-SectorThe stock market is attracting some serious buying euphoria toward Internet stocks, especially social media and Internet information providers.

The key to success for these companies that provide information and services online is the viewership and ability of the site to generate revenues and drive profits.

Other than Google Inc. (NASDAQ/GOOG),one of the most widely followed Internet stocks is Facebook, Inc. (NASDAQ/FB), which just announced it had 1.1 billion subscribers and is beginning to garnish revenues from the high-potential mobile advertising business. (Read “Facebook Does an About-Face: Set to Move Higher?”)

Facebook is attracting buyers, as its stock price may be on the verge of breaking $30.00, a level not achieved since February 1, 2013. Facebook is one of those Internet stocks that are an excellent investment, especially if it can continue to take advantage and monetize its massive subscriber base.

In the travel sector, one of the top Internet stocks is online travel operator Incorporated (NASDAQ/PCLN). But with its share price above $700.00, the stock is out of reach for many.

In the online restaurant area, one of the leading Internet stocks is OpenTable, Inc. (NASDAQ/OPEN), which is still classified as a small-cap that I believe has excellent price appreciation potential.

One of the newer Internet stocks is Yelp, Inc. (NASDAQ/YELP), which operates local business sites across many cities and countries and links consumers to local businesses. Since debuting on March 2, 2012 at $22.00, the stock has gained 50%, including a 25% spike on Thursday after reporting an excellent quarter that displayed superlative growth.

In the first quarter, Yelp generated revenues of $46.1 million, up 68% year-over-year from the comparative first quarter of 2012. The amount of reviews posted on the site increased 42% year-over-year to over 39 million, with over 100 million monthly unique visitors.

Chart courtesy of

The chart shows the steady rise of Yelp in comparison to the S&P 500, based on my technical analysis.

While the valuation following the spike on Thursday is somewhat out of whack at 132-times the Thomson Financial consensus earnings-per-share (EPS) estimate for 2014, Yelp is clearly one of the few Internet stocks to place on your radar. What is most interesting is the company’s positive results on mobile devices. In the first quarter, local ads on mobile devices accounted for 36% of all ads.

On the speculative side of Internet stocks is Groupon, Inc. (NASDAQ/GRPN), which has more than doubled in value from its 52-week low of $2.60 on November 12, 2012. The company’s business model of providing daily deals on goods and services is interesting, but it is not immune to the rising competition from rivals, since the barriers to entry into this market sector are relatively low.

The Internet space is only going to get stronger and offer a better buying opportunity going forward.