Most companies have been retooling since the economic maelstrom in 2009, but it's nice to see online companies that have built up balance sheets that look like solid manufacturing names, writes Andy Obermueller of Fast-Track Millionaire.

In my latest screen, I looked for profitable and debt-free US companies with a market cap of $900 million to $1 billion. Here's a look at three Internet related stocks that made my list.

Shutterfly (SFLY)
This is a Web site that lets users print photos as paper photographs or to include the image on a variety of items, like coffee mugs and calendars.

Its business is highly cyclical, as you can imagine, with the December holidays accounting for the lion's share of the revenue. Even so, the year-over-year top-line growth is impressive, at 58.7% from 2010 to 2011.

The company does nicely on the bottom line as well, at 13.3%. The growth and profitability show up right where they should: In the shareholder equity line on the balance sheet, which has doubled in the past year.

The kicker is that not only is this company debt-free, it's asset-rich. It has $180 million in cold, hard cash. Look for it to deploy this capital with robust advertising, business expansion and, potentially, acquisitions. This company is a strong long-term play. I like it at its current price.

Sourcefire (FIRE)
This is a network defense company. This is a sector where many are predicting strong growth as more and more companies seek to safeguard the data stored in their computers.

Sourcefire has a nice top-line growth trend that amounts to a 30.5% compound annual growth rate and a smokin' high P/E.

But the intrusion-prevention market was about $1.5 billion in 2010. It's projected to grow to $2.1 billion in 2014, and Sourcefire has what looks like an 8% market share, so it can continue to grow indefinitely.

One reason to be confident in that is the company's history. It was founded by Martin Roesch, a bona fide computer genius who wrote the protocol for intrusion detection. (It's called Snort.) Roesch has now built a commercial version of the software in response to industry demand, and it is clearly a leader.

There's nothing not to like about its financials. Its industry position is strong, too. I like this company for a multiyear holding period.

LogMeIn (LOGM).
This company has software that lets you access your computer remotely. It's very good technology that addresses a real need in today's world—mobility.

In the old days, I went into the office; now, my workplace is everywhere, which affords me far more flexibility—while also cutting costs for the company. More and more companies are discovering this win-win approach.

And LOGM, with a 21% net margin and a 55% compound annual growth rate, is clearly taking a leading position in filling the need. Long-term prospects are favorable. This is a great company for a general growth portfolio.

Subscribe to Fast-Track Millionaire here...

Related Reading:

It's Time to Sell These 2 Tech Stocks

This Lion Has Become a Polecat


Can You Buy Apple for $40?

Related Articles
  1. Personal Finance

    A Day in the Life of an Equity Research Analyst

    What does an equity research analyst do on an everyday basis?
  2. Mutual Funds & ETFs

    ETF Analysis: PowerShares S&P 500 Downside Hedged

    Find out about the PowerShares S&P 500 Downside Hedged ETF, and learn detailed information about characteristics, suitability and recommendations of it.
  3. Mutual Funds & ETFs

    ETF Analysis: ProShares Large Cap Core Plus

    Learn information about the ProShares Large Cap Core Plus ETF, and explore detailed analysis of its characteristics, suitability and recommendations.
  4. Mutual Funds & ETFs

    ETF Analysis: iShares Core Growth Allocation

    Find out about the iShares Core Growth Allocation Fund, and learn detailed information about its characteristics, suitability and recommendations.
  5. Mutual Funds & ETFs

    ETF Analysis: iShares MSCI USA Minimum Volatility

    Learn about the iShares MSCI USA Minimum Volatility exchange-traded fund, which invests in low-volatility equities traded on the U.S. stock market.
  6. Stock Analysis

    Should You Follow Millionaires into This Sector?

    Millionaire investors—and those who follow them—should take another look at the current economic situation before making any more investment decisions.
  7. Professionals

    What to do During a Market Correction

    The market has corrected...now what? Here's what you should consider rather than panicking.
  8. Mutual Funds & ETFs

    ETF Analysis: Vanguard Mid-Cap Value

    Take an in-depth look at the Vanguard Mid-Cap Value ETF, one of the largest and most popular mid-cap funds in the U.S. equity space.
  9. Mutual Funds & ETFs

    ETF Analysis: Schwab US Broad Market

    Take an in-depth look at the Schwab U.S. Broad Market ETF, an incredibly low-cost fund based on a wide selection of the U.S. equity market.
  10. Professionals

    Tips for Helping Clients Though Market Corrections

    When the stock market sees a steep drop, clients are bound to get anxious. Here are some tips for talking them off the ledge.
RELATED TERMS
  1. Equity

    The value of an asset less the value of all liabilities on that ...
  2. Fractal Markets Hypothesis (FMH)

    An alternative investment theory to Efficient Market Hypothesis ...
  3. Hard-To-Sell Asset

    An asset that is extremely difficult to dispose of either due ...
  4. Sucker Yield

    When an investor has essentially risked all of his capital for ...
  5. PT (Perseroan Terbatas)

    An acronym for Perseroan Terbatas, which is Limited Liability ...
  6. Ltd. (Limited)

    An abbreviation of "limited," Ltd. is a suffix that ...
RELATED FAQS
  1. What is the difference between called-up share capital and paid-up share capital?

    The difference between called-up share capital and paid-up share capital is investors have already paid in full for paid-up ... Read Full Answer >>
  2. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  3. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  4. What types of capital are not considered share capital?

    The money a business uses to fund operations or growth is called capital, and there are a number of capital sources available. ... Read Full Answer >>
  5. What is the difference between issued share capital and subscribed share capital?

    The difference between subscribed share capital and issued share capital is the former relates to the amount of stock for ... Read Full Answer >>
  6. What happens to the shares of stock purchased in a tender offer?

    The shares of stock purchased in a tender offer become the property of the purchaser. From that point forward, the purchaser, ... Read Full Answer >>

You May Also Like

COMPANIES IN THIS ARTICLE
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!