3 Most Undervalued Stocks Right Now

TL;DR

The three undervalued digital-advertising stocks highlighted are Pinterest, Alphabet, and IAC Interactive. The case rests on internet advertising growing from 6.4% of total U.S. ad spending in 2006 to more than half in 2020, while advertisers redirect canceled TV commitments toward streaming and digital video. Read on for the supporting ad trends, rebound data, and media stocks the speaker considers riskier.

Transcript

hey bowtie nation Joseph Hogue here with the let's talk money Channel welcome to another one of these quick market updates and and I just came across some news and what could possibly be some of the most undervalued stocks of the year in a nation when we look back at all of this in 10 years from now I truly believe what we're gonna look back and se... Read More

Key Insights

• ❓ The COVID-19 pandemic has accelerated the shift towards digital advertising, creating investment opportunities in undervalued stocks.
• 🫠 Internet advertising has experienced significant growth over the years, comprising over half of all ad spending in 2020.
• 🫠 Advertisers are replacing canceled TV ads with streaming and digital video ads, indicating a shift in ad spending.
• 👾 Stocks in the digital advertising space, such as Pinterest, Alphabet, and IAC Interactive, show potential for strong growth.
• 🫠 Ad rates on digital platforms like YouTube have rebounded after a decline, suggesting a recovery in internet advertising.
• 🔉 Traditional media companies with streaming services may face challenges due to the overall decline in traditional media sales.
• ✋ Smaller local broadcasters without online presence may be at higher risk.

Questions & Answers

Q: What are the three most undervalued stocks highlighted right now?

The three stocks highlighted are Pinterest, Alphabet, and IAC Interactive. The speaker connects their potential to the accelerating shift from traditional television advertising toward internet, streaming, and digital-video advertising.

Q: Why does the speaker consider Pinterest undervalued?

Pinterest had shown solid growth in sales and monthly users. Its search engine-like platform also makes it attractive to advertisers as spending moves toward digital channels.

Q: Why could Alphabet benefit from the shift in advertising?

Alphabet, Google's parent company, dominates the online search market. The speaker argues that it stands to benefit as more advertising spending moves online.

Q: What makes IAC Interactive part of the three-stock list?

IAC Interactive operates across multiple internet segments. The existing page analysis specifically points to its dating sites and video-sharing platforms as exposure to the broader digital trend.

Q: How quickly had internet advertising grown?

Internet ad spending reached $29.9 billion in the second quarter of the prior year and had increased at a 28% annual pace for more than 20 years. Its share of U.S. ad spending rose from 6.4% in 2006 to more than half in 2020.

Q: How were canceled TV ad commitments expected to affect digital advertising?

Horizon Media CIO David Campanelli estimated that up to 30% of TV ad commitments would be canceled in the third quarter. Surveys indicated that about half of those advertisers planned to replace canceled commitments with streaming and digital-video advertising.

Q: What evidence suggested that YouTube advertising rates were recovering?

The speaker's YouTube ad rates fell almost 2% in March and 13% in April compared with 2019. During the first two weeks of May, however, they had rebounded to more than 3% above the prior year's level.

Q: Which media stocks does the speaker consider riskier?

The page identifies Comcast, Disney, and AT&T as potentially riskier because declines in traditional media sales could offset gains from their streaming services. Smaller local broadcasters without a strong online presence may face even greater challenges.

Summary & Key Takeaways

• The pandemic has magnified the rise of e-commerce and digital media trends, presenting a unique investing opportunity.

• Traditional TV networks are experiencing a sharp decline in ad commitments, while digital advertising continues to grow steadily.

• Internet advertising has increased from 6.4% of total ad spending in 2006 to over half in 2020.