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4 must-have quality internet stocks on the ASX

car
Credit: NRMA Motoring and Services

Successful American internet businesses like Google, Netflix, and Amazon, have made fortunes for their investors. Here in Australia, if we search our stock market for similar successful businesses with growth prospects, four names stand out. Any investor seeking to invest in Australian internet businesses must consider Webjet Limited (ASX: WEB), Seek Limited (ASX: SEK), REA Group Limited (ASX: REA), and Carsales.com Ltd (ASX: CAR) for their portfolio.

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Webjet Limited

Webjet has the largest market share in the online travel agency market, making it the dominant online travel agency in Australia. Over the last five years the business has enjoyed a 20% compound annual growth rate in bookings. For the most recent half-year financial results to December 31, 2014, the value of total transactions across the business increased by 22.2% compared to the same period last year. The share price has more than doubled since 2010, and the business continues to generate high return on equity.

Seek Limited

Seek is Australia’s number one jobs advertisement website. Seek has become so influential that it is now sometimes used as an indicator of an economy’s condition. Since Seek’s initial public offering on 19 April 2005; it has delivered a whopping 882% total shareholder return. The growth story does not end here and will continue in the future, as it solidifies its position in domestic markets, and expands into international markets and in delivering online courses via Seek learning.

REA Group Limited

REA Group owns Australia’s leading property sale and purchase website, realestate.com.au. In the residential property market, realestate.com.au has gained such wide popularity that more than 90% of all listings nationwide are advertised on the website. The share price performance has been stellar, rising by more than 1,000% since January 2, 2009. The online real estate leader’s ambitions for growth keeps getting higher as it develops new innovative products, competes in adjacent markets like home loan leads, and expands in international markets.

Carsales.com Ltd.

Carsales.com is the most recognised online marketplace for buying and selling cars in Australia. Although it has expanded into other related online marketplaces like caravans, boats and cycles, the carsales.com website still remains the most reputable part of the company. Since listing on the Australian stock exchange in 2009, the company has seen revenue and profits grow ever year. A key indicator of business performance EBITDA (earnings before interest tax depreciation and amortization) increased by 15% for the first half financial year to December 31, 2014.

Foolish takeaway

As evident from the above chart, all four businesses continue to generate high returns on average equity. They are firmly established as leaders with a wide moat in their respective area of business. Their nearest competitors are trailing far behind by a big margin. Any Foolish investor seeking high returns may want to consider adding these stocks to their portfolios.

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Motley Fool contributor Qaiser Malik has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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