In a 135 page report titled “Where We’re Going, We Don’t Need Roads,” Barclays added coverage to eight new companies and outlined its “uber,” or highly positive, bullish outlook on Internet stocks.

The report reasons that because people are “sharing more, communicating more, watching more and buying more online” that the stocks that “touch consumers the most often are going to be the big winners.”

Internet stocks traffic growth

Internet stocks ratings

Citing eight trends to watch, the report then goes deep into research on eight Internet stocks, giving overweight ratings to the likes of Facebook Inc (NASDAQ:FB), Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) and Twitter Inc (NYSE:TWTR)  while Netflix, Inc. (NASDAQ:NFLX) earned an underweight.

Internet stocks

Adult content cost

While the individual stocks are interesting, it is the mega trends that drive equity performance.  Among the top trends is what Barclays is calling “The Rise of the Digital Native.” This is the power of those born after 1995 who essentially were raised in a digital world. Barclays surmises that this group, as they move into their 20s and 30s, Barclays estimate this group that matured not in front of a TV but with a cell phone attached to their hand, will represent $339 billion of household income and $57 billion of increased disposable income “and their habits and experiences are going to shape and accelerate the rate of change online and offline.”

Internet stocks content cost

The report notes the obvious when it identifies that web site identification and personalization as a key to Internet monetary success, as well as companies that can create habitual behavior out of their applications will likely emerge as winners. The report defends the “old guys” in the Internet world – search and email – as being relevant in the new Internet of things era and delivers the insight that the power of scale and new conglomerates will be driven by the “desire is not to be in every industry, just in every area of consumers’ lives.”

internet stocks Social network users

Internet companies growth to come from abroad

Barclays points out that for internet companies, it is a non-US based world where growth will come from abroad and tolerance for NSA spying might not be the same as it apparently is in the US, which hits on the final internet mega trend: privacy and security. It is here Barclays hits the target most clearly: “In a world of always-on connectivity, where users are both voluntarily and involuntarily sharing information, the companies that can build and insure trust will have a major advantage.”

Internet stocks: Google’s valuation

The report is bullish on Google Inc (NASDAQ:GOOG) (NASDAQ:GOOGL), assigning a $650 price target to the company that is in a little bit of everything, including being a military industrial complex play.  While the report did not emphasize the military angle, it did say the one time search engine “offers the broadest set of products and services with some of the highest barriers to entry in the industry.” When comparing Google to the major trends over the near term, “Google matches up better than almost any other company. Throw on top of that a very reasonable valuation, coupled with continued growth in free cash flow and earnings, and we think Google has a lot of headroom to continue to grow.”

Internet stocks Paid Click and CPC Growth