A SAFER WAY TO RIDE THE E-COMMERCE WAVE: WEB BUILDER STOCKS
By Michael Ogburn
So how do you invest safely in this cultural phenomenon called e-commerce?
For the conservative, I would suggest buying FedEx or any other publicly traded overnight delivery service. But for those looking to invest in the Internet, why not put your money behind the Web builders – the firms that are literally turning retailers into e-tailers?
Web development is currently a $4 billion industry that is expected to generate $15 billion by 2002. The pot at the end of that rainbow has systems integrators, design firms, management consultants like Arthur Andersen and big boys like IBM and EDS fighting to put every potential e-tailer online. And going online for an e-tailer no longer means just a nice home page - an e-commerce site requires systems integration, security, database-driven transactions, customer service and more.
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As with any stock, investors should look closely at the web developer's bottom line, especially its earnings and earnings projections. An absolute must is a visit to the company website, and we'd recommend taking the time to browse through some of the client websites as well.
Without a doubt, web developers stand to gain from the e-commerce revolution. Investors shouldn't expect eBay or Amazon-like returns, but some of these companies offer more profitability and less volatility. And in the long term, that makes some of them better bets than an e-tailer.
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