Point Your Portfolio to Internet Brands

Internet Brands, Inc. (INET), an internet media company similar to AOL, Inc. (AOL) or Yahoo! Inc. (YHOO), could see significant upside if online advertising continues to trend upward, while it relatively modest price-earnings ratio of 34.85x makes it worth a look for investors.

 

Internet Brands, Inc. (INET) is an internet media company that owns a valuable portfolio of more than 100 premium web portals that attract more than 55 million unique visitors per month. These web portals target a number of industries, ranging from automotive to travel and leisure, and everything in-between!

 

The internet media company primarily makes money by tuning its traffic, which is derived by 97% non-paid sources, into a growing network of more than 48,000 advertisers. However, it also generates revenues from its licensing certain technology products and services to major corporations and small businesses.

 

During 2009, Internet Brands experienced a 4.3% drop in its revenues to $99.8 million versus $104 million the year before. The drop comes after internet advertising revenues in the U.S. dropped 5.3% to $10.9 billion during the first half of 2009 versus the same period in 2008, according to the IAB Internet Advertising Revenue Report.

 

However, income from operations and other investments, combined with a reduction in income taxes, helped the company report a one cent improvement in earnings per share to $0.27 per diluted share, versus $0.26 the year before. While these may be one-time gains, they still helped to improve the company’s bottom-line during 2009.

 

Meanwhile, many analysts are predicting continued growth for online advertising as the economy begins to show signs of recovery. The secular advertising trend away from old media, like newspapers and classifieds, and into new media, like lead generation and search marketing, is expected to help the sector grow 12% per year through 2013, according to AMR International.

 

As a result, many investors are turning their attention to pure plays on the sector like Internet Brands. If the economy continues to turn and online advertising resumes its upward trajectory, this stock could pay handsome dividends down the road to investors willing to wait out the storm.