The same herd mentality that kept investors out of Internet stocks at the
beginning of the year now gives them the jitters given the market’s latest
pullback from April’s high for many stocks in the Net sector. But Internet
stocks handily beat the market year to date, leaving us wondering if the
selloff isn’t a chance to buy.
Check out the hot list here:
ISDEX Dec. 31 – June 2
| Mecklermedia’s | % change | 02-Jun-98 | Point change |
|---|---|---|---|
| ISDEX. | from | close | from |
| The Internet Stock Index | 31-Dec-97 | 31-Dec-97 | |
| ISDEX Geometric Avg. | 30.6% | 130.42 | 30.55 |
| ISDEX Price Wtd. | 32.2% | 1,317.69 | 321.31 |
| NASDAQ | 12.2% | 1,761.79 | 191.44 |
| DJIA | 12.4% | 8,891.24 | 982.99 |
| CMG Information Services | 174% | $41.50 | $26.38 |
| Network Solutions | 166% | $34.94 | $21.81 |
| Concentric | 154% | $22.50 | $13.63 |
| Broadvision | 136% | $15.31 | $8.81 |
| Infoseek | 122% | $23.81 | $13.06 |
| Earthlink Network | 114% | $55.00 | $29.25 |
| Sportsline USA | 112% | $22.75 | $12.00 |
| Cyberguard | 111% | $11.88 | $6.25 |
| Verisign | 101% | $28.13 | $14.13 |
| PSINet | 98% | $10.16 | $5.03 |
| USWeb | 94% | $18.19 | $8.81 |
| Spyglass | 92% | $9.50 | $4.56 |
| Excite | 89% | $56.63 | $26.63 |
| Doubleclick | 87% | $31.75 | $14.75 |
| America Online | 71% | $77.38 | $32.13 |
| Open Market | 66% | $15.97 | $6.34 |
| Mindspring | 58% | $53.28 | $19.66 |
| RealNetworks | 56% | $21.66 | $7.78 |
| Yahoo! | 51% | $104.81 | $35.56 |
| Axent | 46% | $25.16 | $7.91 |
| Amazon.Com | 45% | $43.69 | $13.56 |
| CKS Group | 42% | $20.13 | $6.00 |
| N2K | 40% | $20.50 | $5.88 |
| Broadband Technologies | 36% | $5.63 | $1.50 |
| @Home Network | 35% | $34.00 | $8.88 |
| Security First Net Bank | 34% | $9.75 | $2.50 |
| Onsale | 33% | $24.00 | $6.00 |
| Lycos | 31% | $54.34 | $12.97 |
| WavePhore | 31% | $12.25 | $2.88 |
| Open Text | 30% | $17.38 | $4.00 |
| IDT Corp | 25% | $25.38 | $5.13 |
| CyberCash | 20% | $15.19 | $2.50 |
| CNET | 15% | $34.00 | $4.50 |
| Egghead.com | 14% | $7.44 | $0.94 |
| Intuit | 13% | $46.81 | $5.56 |
| CDnow | 8% | $17.25 | $1.25 |
| Cylink | 3% | $10.06 | $0.31 |
| Metricom | 1% | $9.75 | $0.13 |
| Netscape | -8% | $22.38 | -$2.00 |
| E*TRADE | -11% | $20.50 | -$2.50 |
| Secure Computing | -15% | $10.00 | -$1.81 |
| CheckFree | -17% | $22.53 | -$4.47 |
| NewsEdge | -18% | $11.00 | -$2.38 |
| Mecklermedia | -19% | $20.19 | -$4.69 |
| Network Associates | -23% | $40.63 | -$12.25 |
| VocalTec | -24% | $15.50 | -$5.00 |
| CheckPoint Software | -30% | $28.38 | -$12.38 |
| PairGain | -32% | $13.13 | -$6.25 |
| Security Dynamics | -43% | $20.53 | -$15.22 |
| Versant Object Technologies | -63% | $5.13 | -$8.69 |
| TOTAL | 32% | 1,317.69 | 321.31 |
| SIMPLE AVERAGE | 32% | 26.35 | 6.43 |
Against the backdrop of the broad market, ISDEX, The Internet Stock Index,
bested the Dow and NASDAQ in gains year to date, up 30% while the other two
only mustered 12%.
Not only that, the top nine stocks in our group listed here are up more
than 100% since we rang in the new year, led by CMG Information Services
(NASDAQ:CMGI), a public venture capital/Internet marketing firm with
positions in Lycos (NASDAQ:LCOS) and GeoCities among its 20 Internet
investments.
Network Solutions (NASDAQ:NSOL), registrar of .com domains, has proven
naysayers wrong so far despite impending competition in the registration
game. We said inertia and branding may be in Network Solutions’ favor, and
this appears to be the case.
Some of the top runners had room to go, particularly Infoseek
(NASDAQ:SEEK), which ever since its IPO seemed to be struggling for
recognition on Wall Street in a crowded search space. But like the runt of
the litter that suddenly spurts and starts touching the rim in basketball
games, Infoseek shot up to north of $40 in April before gravity kicked in,
sending it to $23.81 June 2, still up an impressive 122% YTD.
Concentric (NASDAQ:CNCX) and Earthlink (NASDAQ:ELNK) proved Internet
service providers weren’t dead as investment vehicles; Concentric riding
the corporate sellthrough and Earthlink hitching on Sprint’s bandwagon as
the telco bought a chunk of the consumer-focused ISP.
On the doldrums list, the many security software firm stocks were among
those that lost value since December. Brand names. Market leaders. Names
like CheckPoint Software (NASDAQ:CHKPF), which controls 45% of the entire
firewall market, the applications that keep hackers from rummaging through
corporate networks. Or Security Dynamics (NASDAQ:SDTI), an outfit
synonymous with the sector, a pioneer.
Content and others in the group–with real earnings and market positions
difficult or impossible to create from scratch–also trade on the fallen
side. We believe it’s more a case of investors not doing their homework
than fundamentals with this handful of players. You can lead a horse to water.