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01/01/2010

Top 10 Best and Worst Internet Stocks of 2009

After a dismal 2008, Internet stocks crushed the overall market in 2009, with the sector up +89.9% vs. the NASDAQ's +43.9% gain and the S&P 500's +23.5% gain.  The average Internet stock gained +91.6% indicating that the gains were pretty evenly spread across small and large cap companies.

Despite this year’s massive really, the Internet sector is still down -9.2% compared to year-end 2007, but it has performed much better than the overall market, as the S&P 500 remains down -24.1% vs. year end 2007.


2009 Top 10 Best Performing Internet Stocks
There’s no clear theme to this year’s crop of winners, other than they were all big losers last year.  The average Top 10 stock this year was off -64.3% in 2008 vs. the sector’s -52.2% decline. To be included on this year's list, a stock had to start the year with at least a $20M market cap.  Despite that very low bar, fully 15% of Internet stocks did not qualify.  Of the ones that did here are the Top 10 Performers:

  1. Internet Gold
    Price Change: 710% Ticker: IGLD
    Comment
    :  After being down 80% in 2008 this Israeli ISP was true to its name in 2009.  The cynic in me wonders just how much of this price appreciation was due to the fact that IGLD has “Gold” in its name, but it is what it is.
  2. Local.com
    Price Change: 275% Ticker:LOCM
    Comment
    :  Local advertising became a hot topic in 2009 and Local.com benefited from the buzz as well as signs of real traction in its business model.
  3. US Auto Parts
    Price Change
    : 274% Ticker: PRTS
    Comment:  The web’s largest retailer of auto parts was down 83% in 2008 as the entire auto industry imploded, however PRTS saw a decent recovery in 2009 as investors realized that old cars still need new parts.
  4. Kongzhong
    Price Change
    : 270% Ticker:KONG
    Comment:  This Chinese mobile internet services provider saw good growth, especially in it’s mobile gaming business.
  5. Tree.com
    Price Change: 252% Ticker: TREE
    Comment
    : Otherwise known as LendingTree, this online mortgage lead gen site recovered from a brutal 2008 thanks to cost cutting and a favorable mortgage refinancing environment.
  6. Webzen
    Price Change
    : 251% Ticker: OMTR
    Comment
    : Webzen is a major Asian provider of online games, especially in Korea.  It was down 78% in 2008 but saw good growth in 2009 and renewed investor enthusiasm for online gaming.
  7. YouBet.com
    Price Change: 238% Ticker: UBET
    Comment
    : Youbet is the only public company to operate a legal online gambling site in the US (online betting for horse races is legal in the US). It saw questions about its viability subside in 2009.
  8. Packet 8
    Price Change
    : 219% Ticker: EGHT
    Comment
    :  This provider of SMB focused hosted IP PBX VOIP systems became solidly profitable in 2009 and benefited from investor enthusiasm for all things SaaS.
  9. Mercadolibre
    Price Change
    : 216% Ticker: MELI
    Comment
    : Brazil’s answer to EBay and Amazon recovered from emerging market jitters in 2008 to post a strong growth in 2009.
  10. Bidu.com
    Price Change
    : 215% Ticker: BIDU
    Comment
    : China's leading search engine recovered from a -67% loss in 2008 as it put distance between itself and Google and clearly enjoyed the favor of the Chinese government.

By the way, the top performing internet stock in 2009, regardless of market cap, was VOIP services provider Delta Three (DDDC), it was up a whopping 2,213%.  Despite this amazing gain DDDC is still down -7.5% from its year end 2007 close.  Now that’s a ride!


2008 Top 10 Worst Performing Internet Stocks

Believe it or not, there were some Internet stocks that did not go straight up this year.  In fact about 15% of Internet stocks actually went down this year, a truly dubious achievement when the rest of the sector was up 90%.   As with our top performers, to be included on this list of shame, a stock had to start the year with at least $20M in market cap. The Top 10 Worst Performning Internet Stocks of 2009 are:  

  1. EDiets.com
    Price Change: -63% Ticker: DIET
    Comment
    :  DIET almost starved itself to death in 2009.
  2. Bidz.com
    Price Change: -57% Ticker:BIDZ
    Comment
    :  This Canadian competitor to Blue Nile ran into the two words most dreaded by a public company: accounting irregularities. 
  3. The9 Limited
    Price Change
    : -46%% Ticker: NCTY
    Comment:  Having the World of Warcraft license for online game crazy China is a sure thing right?  Not if the Chinese government bans it.
  4. Atrinsic
    Price Change
    : -43% Ticker:ATRN
    Comment:  Not a good year for this online marketing services company.
  5. Gigamedia
    Price Change: -42% Ticker: GIGM
    Comment
    : Online gaming and gambling company saw revenues from its European poker and Asian gaming divisions fall.
  6. Looksmart
    Price Change
    : -37% Ticker: LOOK
    Comment
    :This search services provider searched in vain for a viable business model in 2009.
  7. 1–800–Flowers.com
    Price Change
    : -31% Ticker: FLWS
    Comment
    : If you know a investor in 1–800–Flowers in 2009 you might want to order them some lillys.
  8. Chartwell Technology
    Price Change
    : -28% Ticker: CWH.TO
    Comment
    :  This Canadian listed provided of online gaming technology saw few customers in 2009.
  9. Marchex
    Price Change
    : -13% Ticker: MCHX
    Comment
    : This online "pay for performance" marketer was hurt by mounting consumer complaints and a congressional investigation into the industry.

Note: This is not a recommendation to buy or sell these stocks or anything else.  It is not investment advice, it is just an objective list of past stock performance.  Please see my disclaimer at the bottom of this post.

January 1, 2010 | Permalink

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