Small-Stock Focus: Stocks of Internet Retailers Are in Frenzy Mode
The recipe seems too easy: Make widget, sell widget, add Web site.</br></br>Stock prices for a growing number of companies are soaring on the burgeoning enthusiasm about the Internet and online shopping. Since November, brisk holiday sales on the World Wide Web have sent investors hunting for any company looking to expand its presence on the popular medium.</br></br>The impact has been felt in just about every, and any, Internet-related stock. The Chicago Board Options Exchange's Internet Index set a new high Monday at 426.96 and has doubled since mid-October. (Yesterday the index was down 11.4 to 415.56.) The market capitalization of Charles Schwab, which owns the largest online broker, jumped over securities behemoth Merrill Lynch this week. And after the close tomorrow, as previously announced, America Online will join the blue-chip Standard & Poor's 500-stock index, further raising the demand for the Internet-service provider's shares.</br></br>What's more, a number of obscure small stocks are surging on the news of Web efforts. Heavyweight motorcycle manufacturer Bikers Dream more than doubled to 6 27/32 on the Nasdaq Stock Market as news reports about the company's planned Internet sales channel spread. Catalog specialty-retailer SkyMall has tripled since Christmas, after it announced faster-than-expected sales growth on its Web site. And Active Apparel Group, a tiny sportswear manufacturer, has increased by a factor of 15 after reporting new Internet retailing links. Yesterday, the New York company's stock rose 7 1/2, or 65%, to 19.</br></br>"A lot of stocks are moving up on announcements of interest in e-tailing," says Keith Benjamin, Internet analyst at BancBoston Robertson Stephens. Fine-art auctioneer Sotheby's, for example, jumped 6% this month when a Merrill Lynch analyst mentioned the company's Internet prospects. Retailer Sharper Image's Web site was mentioned in news reports after Thanksgiving, helping the stock to an all-time high of 21 3/16 Nov. 30.