MORGAN STANLEY: Here are the 6 internet stocks to bet on in 2018

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Technology stocks have been a beacon of strength in the stock market for much of the 8 1 2-year equity bull market, and a big driver has been internet companies.

Morgan Stanley has picked six internet stocks that it says will make good investments in 2018.

In 2017, making money investing in tech stocks was an easy proposition.

The S&P 500 Information Technology Index surged 37 , outpacing the next-closest sector by 15 percentage points and nearly doubling the return for the benchmark. Of the 68 companies in the group, a whopping 61 posted a positive return for the year. It was a veritable bonanza of stock gains.

But what about 2018? With stock-picking conditions the ripest they've been since the tech bubble, there are still plenty of money-making opportunities in the industry.

The Morgan Stanley analyst Brian Nowak has put together stock recommendations for the internet sector specifically, weighing a multitude of factors to arrive at six that he thinks could outperform in 2018.

Without further ado, here are those stocks, with an explanation of why Morgan Stanley likes them so much:GrubHub

Markets Insider

Ticker: GRUB

Price target: 77

Stock upside: 13

Morgan Stanley rationale: "We are OW on GRUB and see the announced acquisitions as smart moves to further solidify its #1 share in a growing online delivery marketplace. On a pro-forma basis, GRUB is 3.5x larger than its nearest competitor with 50 more supply, which we believe better positions GRUB to continue to drive the budding online food delivery industry. We do not expect competitive pressure particularly from Amazon Restaurants and UberEats to let up, but see GRUB's larger revenue base enabling it to scale faster with strong EBITDA and cash flow."

Zynga

Markets Insider

Ticker: ZNGA

Price target: 4.50

Stock upside: 13

Morgan Stanley rationale: "We are bullish on ZNGA and see them in the beginning of a multi-year turnaround driven by a live services strategy that started with Poker and should translate well with other Zynga IP. Combined with opex discipline with new games to be released in 2H18, we see strong margin expansion and profitable growth for ZNGA 2018 and 2019."

Activision Blizzard

Markets Insider

Ticker: ATVI

Price target: 75

Stock upside: 8

Morgan Stanley rationale: "We are Overweight ATVI as we think the digital transformation is still early days and will lead to better than expected EPS growth over the next 3-5 years. After a 75 run in 2017, ATVI trades at 26x Consensus 2018 EPS. While not cheap, we note that we are 9 of the street on 2018 EPS and we see multiple drivers of upside in 2018 2019 given strong execution in 2017."

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