1 Internet Stock with Competitive Advantages and 2 We Find Risky

Consumer internet businesses are redefining how people engage with the world by giving them instant connectivity and convenience. This influence cuts both ways though because they have high exposure to the ups and downs of consumer spending, and uncertainty surrounding this factor has capped the industry's returns - over the past six months, its 10.1% gain has lagged the S&P 500 by 6.2 percentage points.

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. On that note, here is one resilient internet stock at the top of our wish list and two that may face trouble.

Founded by a struggling amateur furniture maker Robert Kalin and his two friends, Etsy (NYSE:ETSY) is one of the world's largest online marketplaces, focusing on handmade or vintage items.

Intense competition is diverting traffic from its platform as its active buyers fell by 2.1% annually

Lackluster growth in its average revenue per buyer coupled with its weaker engagement trends led to sluggish demand over the last two years

Earnings per share lagged its peers over the last three years as they only grew by 1.4% annually

At $73.10 per share, Etsy trades at 12.1x forward EV/EBITDA. Check out our free in-depth research report to learn more about why ETSY doesn't pass our bar.

Originally founded as a part of Microsoft, Expedia (NASDAQ:EXPE) is one of the world's leading online travel agencies.

Platform monetization efforts took a back seat over the last two years as it focused on growing its bookings

Estimated sales growth of 6.4% for the next 12 months implies demand will slow from its three-year trend

High marketing expenses suggest it needs to spend heavily on new customer acquisition to sustain momentum

Expedia is trading at $262.95 per share, or 7.1x forward EV/EBITDA. Dive into our free research report to see why there are better opportunities than EXPE.

Founded by famous lawyer Robert Shapiro, LegalZoom (NASDAQ:LZ) offers online legal services and documentation assistance for individuals and businesses.

Subscription Units have increased by an average of 10.7% annually, giving it the potential for margin-accretive growth if it can develop valuable complementary products and features

Platform's growing usage and its ability to increase user spending by 17.2% annually showcases its high switching costs

Highly efficient business model is illustrated by its impressive 23.1% EBITDA margin, and its profits increased over the last few years as it scaled

LegalZoom's stock price of $5.74 implies a valuation ratio of 4x forward EV/EBITDA. Is now the time to initiate a position? Find out in our full research report, it's free.

WHILE YOU'RE HERE: Top 9 Market-Beating Stocks. The best stocks don't just beat the market once. They do it again. And again. Robust revenue growth, rising free cash flow, returns on capital that leave their competition in the dust. The market has already rewarded these businesses.

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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,460% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Tecnoglass (+1,552% between June 2020 and June 2025). Find your next big winner with StockStory today.