By breaking down physical barriers, consumer internet businesses are reshaping how people shop, connect, learn, and play. But it’s not all sunshine and rainbows as consumer purchasing power can make or break demand. This unpredictability is weighing on returns as the industry has posted a flat return over the past six months while the S&P 500 was up 10.6%.
Despite the lackluster result, a few diamonds in the rough can produce earnings growth no matter what, and we started StockStory to help you find them. Taking that into account, here are two internet stocks we think can generate sustainable market-beating returns and one we’re steering clear of.
One Consumer Internet Stock to Sell:
LendingTree (TREE)
Market Cap: $918.3 million
Using the same comparison model that revolutionized travel booking, LendingTree (NASDAQ: TREE) operates an online platform that connects consumers with financial service providers across mortgages, personal loans, credit cards, insurance, and other financial products.
Why Do We Pass on TREE?
- Flat sales over the last three years suggest it must innovate and find new ways to grow
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 8.5%
- Highly competitive market means it’s on the never-ending treadmill of sales and marketing spend
At $67.20 per share, LendingTree trades at 8.9x forward EV/EBITDA. Check out our free in-depth research report to learn more about why TREE doesn’t pass our bar.
Two Consumer Internet Stocks to Watch:
Amazon (AMZN)
Market Cap: $2.55 trillion
Founded by Jeff Bezos after quitting his stock-picking job at D.E. Shaw, Amazon (NASDAQ: AMZN) is the world’s largest online retailer and provider of cloud computing services.
Why Could AMZN Be a Winner?
- Amazon revolutionized the way consumers shop. This isn’t the only tailwind to its impressive revenue growth, as its highly profitable AWS segment has also driven top-line momentum.
- The company's best-in-class revenue growth coupled with modest operating leverage on its past infrastructure investments has led to elite EPS growth over a multi-year period.
- Though dominant, Amazon's capital-intensive e-commerce business means its profitability is structurally lower than its pure-play tech peers. Can the company pull it up, or are we reaching a ceiling?
Amazon’s stock price of $237.85 implies a valuation ratio of 31.8x forward price-to-earnings. Is now a good time to buy? Find out in our full research report, it’s free.
CarGurus (CARG)
Market Cap: $3.32 billion
Bringing transparency to a sometimes opaque process, CarGurus (NASDAQ: CARG) is a digital marketplace where auto dealers can connect with potential customers and where car buyers can browse, purchase, and obtain financing.
Why Are We Positive On CARG?
- Customers are spending more money on its platform as its average revenue per user has increased by 11.3% annually over the last two years
- Excellent EBITDA margin of 29.2% highlights the efficiency of its business model, and its efficiency improved over the last few years as its margin expanded
- Free cash flow margin jumped by 20.9 percentage points over the last few years, giving the company more resources to pursue growth initiatives, repurchase shares, or pay dividends
CarGurus is trading at $34.74 per share, or 10.3x forward EV/EBITDA. Is now the time to initiate a position? See for yourself in our in-depth research report, it’s free.
High-Quality Stocks for All Market Conditions
If your portfolio success hinges on just 4 stocks, your wealth is built on fragile ground. You have a small window to secure high-quality assets before the market widens and these prices disappear.
Don’t wait for the next volatility shock. Check out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 244% over the last five years (as of June 30, 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
