Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 stocks made the list for top value stocks in the Online Services industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Online Services Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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6 Undervalued Online Services Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Online Services industry for Monday, December 18, 2023. Let’s take a closer look at their individual scores to see how they measure up against each other and the Online Services industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Beyond Inc’s Value Grade

Value Grade:

Beyond, Inc., formerly Overstock.com, Inc., is an online furniture and home furnishings retailer in the United States and Canada. The Company operates a proprietary retail marketplace to connect consumers with products they love. It owns the Bed Bath & Beyond brand and associated intellectual property. The Company’s e-commerce Website sells a range of home products, including furniture, bedding and bath, patio and outdoor, area rugs, tabletop and cookware, decor, storage and organization, small appliances, home improvement, and more.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Beyond Inc has a Value Score of 63, which is considered to be undervalued.

When you look at Beyond Inc’s price-to-sales ratio at 0.70 compared to the industry median at 1.25, this company has a lower price relative to revenue compared to its peers. This could make Beyond Inc’s stock more attractive for value investors.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Beyond Inc’s shareholder yield is higher than its industry median ratio of (1.18%). Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Beyond Inc’s price-to-book ratio is higher than its industry median ratio of 1.87. This could make Beyond Inc less attractive to investors looking for a new addition to their portfolio.

MYT Netherlands Parent BV-ADR’s Value Grade

Value Grade:

MYT Netherlands Parent B.V., is a Germany-based holding company. The Company, through its subsidiary Mytheresa Group GmbH, operates as an electronic commerce platform for the global luxury fashion consumer, in addition to its flagship retail store and men’s location in Munich. The Company’s segments include online operations and retail store. The Company operates its businesses at the connection of luxury fashion, technology and service.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

MYT Netherlands Parent BV-ADR has a Value Score of 88, which is considered to be undervalued.

MYT Netherlands Parent BV-ADR’s price-to-book ratio is higher than its peers. This could make MYT Netherlands Parent BV-ADR less attractive for value investors when compared to the industry median at 1.87.

You can read more about MYT Netherlands Parent BV-ADR’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Outbrain Inc’s Value Grade

Value Grade:

Outbrain Inc. is a recommendation platform for advertisers and digital media owners. The Company?s technology provides personalization, engagement and monetization solutions to digital media properties, including many publishers. The Company provides media owners with a platform that encompasses data at scale, as well as prediction and recommendation capabilities, helping media partners, deliver a discovery feed personalized to their users, based on context and each user?s interests and preferences. Its platform is built for user engagement. The Company's technology enables over 10 billion daily recommendations to consumers across more than 7,000 online properties and connects advertisers to its audiences. The Company has offices in approximately 17 cities worldwide. Its subsidiaries include Outbrain Israel Ltd., Outbrain UK Limited, Outbrain Italy SRL and Outbrain Spain S.L., Outbrain Germany GmbH, Outbrain India Private Limited, Outbrain Japan KK and Outbrain Australia PTY Ltd.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Outbrain Inc has a Value Score of 73, which is considered to be undervalued.

Outbrain Inc’s price-to-book ratio is higher than its peers. This could make Outbrain Inc less attractive for value investors when compared to the industry median at 1.87.

You can read more about Outbrain Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

OLB Group Inc’s Value Grade

Value Grade:

The OLB Group, Inc. is a diversified Fintech eCommerce merchant services provider and Bitcoin crypto mining enterprise. Its eCommerce platform delivers cloud-based merchant services for a comprehensive digital commerce solution to over 10,300 merchants in diversified market sectors in all 50 states. Its business functions through three subsidiaries, eVance, Inc. (eVance), OmniSoft.io, Inc. (OmniSoft), and CrowdPay.Us, Inc. (CrowdPay). OmniSoft operates a cloud-based business management platform that provides turnkey solutions for merchants to enable them to build and manage their retail businesses. eVance provides competitive payment processing solutions to merchants, which enable merchants to process credit and debit card-based internet payments for sales of their products. CrowdPay.US operates a white label capital raising platform that targets small and midsized businesses seeking to raise capital. DMint, a subsidiary of the Company, is engaged in the mining of Bitcoin in Tennessee.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

OLB Group Inc has a Value Score of 62, which is considered to be undervalued.

OLB Group Inc’s price-to-book ratio is higher than its peers. This could make OLB Group Inc less attractive for value investors when compared to the industry median at 1.87.

You can read more about OLB Group Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Trivago NV - ADR’s Value Grade

Value Grade:

Trivago NV is a Germany-based company that operates an online hotel search platform. The Company and its subsidiaries offer online meta-search for hotel and accommodation through online travel agencies (OTAs), hotel chains and independent hotels. The company is focused on focused on reshaping the way travelers search for and compare hotels while enabling hotel advertisers to grow their businesses by providing access to a broad audience of travelers through the Company's websites and apps. The platform allows travelers to make informed decisions by personalizing their hotel search and providing access to a deep supply of hotel information and prices. The company operates in three operating segments namely the Americas, Developed Europe and the Rest of the World. The Company offer marketing tools to help promote their listings on platform and drive traffic to their websites. The tools and services, including the subscription-based trivago Business Studio Pro Apps Package.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Trivago NV - ADR has a Value Score of 100, which is considered to be undervalued.

Trivago NV - ADR’s price-to-book ratio is higher than its peers. This could make Trivago NV - ADR less attractive for value investors when compared to the industry median at 1.87.

You can read more about Trivago NV - ADR’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

JOYY Inc (ADR)’s Value Grade

Value Grade:

JOYY Inc. is a global technology company. The Company operates several social products, including Bigo Live for live streaming, Likee for short-form videos, Hago for multiplayer social networking, an instant messaging product, and others. The Company operates through two segments: BIGO and All other. The BIGO segment primarily consists of several social entertainment platforms, including Bigo Live, Likee, imo, and others. The All other segments primarily consist of Hago, Shopline, and certain audio live streaming platforms. Bigo Live enables its users to share their life moments, showcase their talents, socialize and connect with other users. Likee enables users to easily discover, create and share short-form videos, empowered by its easy and all-in-one video creation tools, such as filters and special effects, and AI-backed personalized feed. Hago provides casual games, integrating social features such as audio and video multiuser chatrooms and 3D virtual interactive party games.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

JOYY Inc (ADR) has a Value Score of 77, which is considered to be undervalued.

JOYY Inc (ADR)’s price-to-book ratio is higher than its peers. This could make JOYY Inc (ADR) less attractive for value investors when compared to the industry median at 1.87.

You can read more about JOYY Inc (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Online Services Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Online Services stocks as well as other industrys.

Choosing Which of the 6 Best Online Services Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Beyond Inc stock has a Value Grade of B.
• MYT Netherlands Parent BV-ADR stock has a Value Grade of A.
• Outbrain Inc stock has a Value Grade of B.
• OLB Group Inc stock has a Value Grade of B.
• Trivago NV - ADR stock has a Value Grade of A.
• JOYY Inc (ADR) stock has a Value Grade of B.

Now that you have a bit more background about each of the 6 undervalued stocks in the Online Services industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Online Services Stocks

Want to learn more about Online Services stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 6 Undervalued Online Services Stocks for Monday, December 18
• What You Need to Know About ACV Auctions Inc's Q3 Earnings
• What You Need to Know About Airbnb Inc's Q3 Earnings
• What You Need to Know About Alibaba Group Holding Ltd - ADR's Q2 Earnings

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.