Will Akamai and InterNap Bounce Higher?

Before you go, we thought you'd like these...
Before you go close icon

However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.               

There are 70 stocks listed under "Internet" in the CAPS screener, of which only a dozen carry well-respected four- and five-star ratings. Those accolades mean our 180,000 CAPS members are confident that these stocks will beat the market in the months ahead, but let's see what members are saying about the ones below:

Company

CAPS Rating Today

Recent Price

52-Week Price Change

Est. 5-Yr. Growth Rate

Akamai (NAS: AKAM)

****

$37.68

1%

14%

Internap (NAS: INAP)

****

$7.42

14%

20%

Source: Motley Fool CAPS.


Let's take a closer look at why investors think these two companies that exceeded the market and their industry won't be jumping from the frying pan into the fire now that the markets are on a roll again.

Lighter than air
Content delivery network operators like Akamai, Internap, and Rackspace have leapt ahead, and year-to-date performance has been similarly strong. Even Limelight Networks (NAS: LLNW) , which was down sharply from the year-ago period, is up by double-digit percentages in 2012.

There doesn't seem to be a reason that such gains can't be extended going forward. The broad move to cloud computing by enterprise level businesses, coupled with consumer-based mobile computing platform growth, ensures that those companies delivering content will report strong demand.

For example, CDN industry leader Akamai not only surpassed analyst fourth-quarter estimates, but offered up better-than-expected first-quarter revenue guidance, too. By bolstering its acceleration technology segment with acquisitions and adding top rival Cotendo to its portfolio -- bringing with it customers that include Facebook and Zynga -- it advances its industry-leading position.

Similarly, Internap beat Wall Street's profit estimates and met its expectations for revenue growth, which was up 5% year over year, even though IP services fell 2.6%. In contrast, its data center operations were up 12% from 2010.

Data centers seem to be the key. Last year, equipment makers like Juniper Networks (NAS: JNPR) and even Cisco (NAS: CSCO) were reporting sales for data center enhancements and leading the pace of expansion. Now Internap and Akamai are looking to assist customers in improving the delivery of content and applications. With cellular wireless network traffic expected to grow by nearly 10 times its current level, it's not just bandwidth concerns, but whether wireless operators will be able to effectively deliver content to customers.

That's where Akamai's and Internap's acceleration technologies come into play. While the CAPS community thinks the rising tide will lift all boats, and those weighing in on Internap believe it will handily outperform the broad market averages, CAPS member dnafar thinks Akamai has a head start on its rivals here:

Given the Internet progress on all the regular platforms,and the secure and seamless demands, which Akamai is well experienced and a leader. The future can only get better, with the current executive team.

Add Akamai Technologies and Internap to your Watchlist, and let us know in the comments section below whether they'll be the center of attention in the quarters to come.

The ball's in your court
You don't have to be an international giant to make it big, but if you want to ride Apple's coattails into history, look no further than The Motley Fool's free report: "3 Hidden Winners of the iPhone, iPad, and Android Revolution." Find out how you can cash in on the booming smartphone and tablet market today. Get your free report.

At the time this article was published Fool contributorRich Dupreyowns shares of Cisco Systems, but he holds no other position in any company mentioned.Click hereto see his holdings and a short bio. The Motley Fool owns shares of Cisco Systems.Motley Fool newsletter serviceshave recommended buying shares of Rackspace Hosting. The Motley Fool has adisclosure policy.We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. Try any of our Foolish newsletter servicesfree for 30 days.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Read Full Story

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners