Ten years after the dot com crash, there are still stocks that are considered pure plays on the internet. And believe it or not, many of them are outperforming the market and could be solid investments for 2011. Four that caught my eye are below.
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Fast Growers
(Nasdaq:SFLY) is an internet-based company that provides photography options for customers to upload and print or personalize their pictures. Technically the stock has been on a big run, up over 100% in 2010 and only recently pulling back a few percentage points. The pullback may continue as the stock has gotten ahead of its fundamentals, trading with a forward P/E ratio of 49.7. If SFLY can fall to the $30 area it would become more attractive as a long-term play.

Ancestry.com (Nasdaq:ACOM) is an online resource for people that are interested in building their family tree through records compiled by the company. The revenue stream is based on a subscription model in which customers pay a monthly fee to use the ACOM database. Similar to SFLY, ACOM is up over 100% in 2010 and has recently pulled back to support at the $27 area. Fundamentally the stock is expected to grow earnings by 50% in 2010 and 33% in 2011 - both are impressive numbers. The forward P/E ratio is also more acceptable at 27.3. A buy near $26-27 is ideal. (For more, see 3 Value Plays Revealed Using Forward P/E.)

Innovative Dining
(Nasdaq:OPEN) provides what the company terms "restaurant reservation solutions." I consider OPEN the best concept for dining in years. Instead of calling and trying to figure out where to eat and getting a reservation that works, it can now all be done on their website - for free! OPEN is yet another double in 2010 and is just off its all-time high set in early December. The rally has caused the stock to be fully valued with a forward P/E ratio of 65.6. That being said a pullback to the $60s could be enough to entice me to build a position in this niche growth company. (For related reading, see Don't Ask Santa For These Stocks.)

Losing Money
(Nasdaq:SPRT) is a company that offers technology support via the internet or phone. It identifies, diagnoses and resolves the issues for the client. The stock is sitting at the best level in nearly four years, but is well off its high that was set in 2000 when it went public. The stock differs from the first three because it is currently losing money and therefore the valuation is tough to assess. SPRT could be considered a momentum play that is up nearly three-fold in 2010. Calling SPRT aggressive is an understatement.

Bottom Line
Even though the dot com era is over, there are still niche players in the market that can dominate and make investors lots of money. The four above appear to be positioned well heading into 2011. (For related reading, see Honeywell's 2011 Outlook.)

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