Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 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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7 Undervalued Online Services Stocks
Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the Online Services industry for Friday, February 09, 2024. 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.
| Company | Ticker | Price/Sales | Price/Earnings | EV/EBITDA | Shareholder Yield | Price/Book Value | Price/Free Cash Flow | Value Grade |
| Alibaba Group Holding Ltd - ADR | BABA | 1.38 | 13.1 | 6.9 | 3.2% | 1.27 | 7.9 | B |
| Buzzfeed Inc | BZFD | 0.08 | na | na | (4.4%) | 0.22 | na | A |
| Baozun Inc (ADR) | BZUN | 0.11 | na | na | 0.0% | 0.24 | na | A |
| Dingdong (Cayman) Ltd (ADR) | DDL | 0.10 | na | na | (0.3%) | 5.21 | 6.7 | B |
| Stitch Fix Inc | SFIX | 0.26 | na | na | (3.8%) | 1.74 | 6.1 | B |
| Upexi Inc | UPXI | 0.25 | na | na | (21.1%) | 0.87 | na | B |
| Vacasa Inc | VCSA | 0.10 | na | 3.6 | (9.5%) | 0.60 | na | A |
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.
Alibaba Group Holding Ltd - ADR’s Value Grade
Value Grade:
| Metric | Score | BABA | Industry Median |
| Price/Sales | 44 | 1.38 | 1.30 |
| Price/Earnings | 37 | 13.1 | 18.3 |
| EV/EBITDA | 33 | 6.9 | 13.3 |
| Shareholder Yield | 26 | 3.2% | (1.3%) |
| Price/Book Value | 40 | 1.27 | 1.90 |
| Price/Free Cash Flow | 23 | 7.9 | 21.7 |
Alibaba Group Holding Ltd provides technology infrastructure and marketing platforms. The Company operates through seven segments. China Commerce segment includes China retail commerce businesses such as Taobao, Tmall and Freshippo, among others, and wholesale business. International Commerce segment includes international retail and wholesale commerce businesses such as Lazada and AliExpress. Local Consumer Services segment includes location-based businesses such as Ele.me, Amap, Fliggy and others. Cainiao segment includes domestic and international one-stop-shop logistics services and supply chain management solutions. Cloud segment provides public and hybrid cloud services like Alibaba Cloud and DingTalk for domestic and foreign enterprises. Digital Media and Entertainment segment includes Youku, Quark and Alibaba Pictures, other content and distribution platforms and online games business. Innovation Initiatives and Others segment include Damo Academy, Tmall Genie and others.
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.
Alibaba Group Holding Ltd - ADR has a Value Score of 76, which is considered to be undervalued.
When you look at Alibaba Group Holding Ltd - ADR’s price-to-sales ratio at 1.38 compared to the industry median at 1.30, this company has a higher price relative to revenue compared to its peers. This could make Alibaba Group Holding Ltd - ADR’s stock less attractive for value investors.
Alibaba Group Holding Ltd - ADR’s price-earnings ratio is 13.12 compared to the industry median at 18.30. This means it has a lower share price relative to earnings compared to its peers. This could make Alibaba Group Holding Ltd - ADR more attractive for value investors.
Now, let’s assess Alibaba Group Holding Ltd - ADR’s EV/EBITDA ratio, also known as enterprise multiple. At 6.9, when compared to the industry median of 13.3, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.
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. Alibaba Group Holding Ltd - ADR’s shareholder yield is higher than its industry median ratio of (1.32%). 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. Alibaba Group Holding Ltd - ADR’s price-to-book ratio is lower than its industry median ratio of 1.90. This could make Alibaba Group Holding Ltd - ADR more attractive to investors looking for a new addition to their portfolio.
Lastly, let’s take a look at Alibaba Group Holding Ltd - ADR’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Alibaba Group Holding Ltd - ADR’s price-to-free-cash-flow ratio is lower than its industry median ratio of 21.71. This could make Alibaba Group Holding Ltd - ADR more attractive because the lower P/FCF ratio indicates that Alibaba Group Holding Ltd - ADR is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.
Buzzfeed Inc’s Value Grade
Value Grade:
| Metric | Score | BZFD | Industry Median |
| Price/Sales | 3 | 0.08 | 1.30 |
| Price/Earnings | na | na | 18.3 |
| EV/EBITDA | na | na | 13.3 |
| Shareholder Yield | 73 | (4.4%) | (1.3%) |
| Price/Book Value | 4 | 0.22 | 1.90 |
| Price/Free Cash Flow | na | na | 21.7 |
BuzzFeed, Inc. is a digital media company. The Company builds and assembles a portfolio of brands for Gen Z and Millennial audiences across food, news, pop culture, and commerce. The Company’s portfolio brands include BuzzFeed, Tasty, HuffPost, BuzzFeed News, and Complex Networks. Its BuzzFeed brand has become a go-to authority for curating entertainment, pop culture, and the Internet. With articles, lists, quizzes, videos, and original series. HuffPost is a media platform for news, politics, opinion, entertainment, features, and lifestyle content. BuzzFeed News provides a newsroom to younger audience. Complex Networks, a youth entertainment company that drives culture across music, food, style, entertainment, and sports with brands, including First We Feast, Pigeons & Planes, Sole Collector and Complex, as well as live events, led by ComplexCon. It provides its advertising customers with a range of offers, including display, programmatic, and video advertising inventory.
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.
Buzzfeed Inc has a Value Score of 89, which is considered to be undervalued.
Buzzfeed Inc’s price-to-book ratio is higher than its peers. This could make Buzzfeed Inc less attractive for value investors when compared to the industry median at 1.90.
You can read more about Buzzfeed 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.
Baozun Inc (ADR)’s Value Grade
Value Grade:
| Metric | Score | BZUN | Industry Median |
| Price/Sales | 4 | 0.11 | 1.30 |
| Price/Earnings | na | na | 18.3 |
| EV/EBITDA | na | na | 13.3 |
| Shareholder Yield | 48 | 0.0% | (1.3%) |
| Price/Book Value | 4 | 0.24 | 1.90 |
| Price/Free Cash Flow | na | na | 21.7 |
Baozun Inc is a holding company mainly engaged in the provision of brand e-commerce solutions. The Company focus on providing integrated brand-e-commerce solutions to their brand partners, including information technology (IT) solutions, online store operation, digital marketing, customer services, as well as warehousing and fulfillment. The Company operates under three business models: distribution model, service fee model and consignment mode, according to different needs of their brand partners. The Company provides omni-channel solutions across official brand stores, online marketplaces, such as Tmall, JD.com and Pinduoduo, and social media channels, such as WeChat Mini Programs and RED (Xiaohongshu), as well as emerging live streaming and short video platforms, such as Douyin and Kuaishou.
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.
Baozun Inc (ADR) has a Value Score of 97, which is considered to be undervalued.
Baozun Inc (ADR)’s price-to-book ratio is higher than its peers. This could make Baozun Inc (ADR) less attractive for value investors when compared to the industry median at 1.90.
You can read more about Baozun 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.
Dingdong (Cayman) Ltd (ADR)’s Value Grade
Value Grade:
| Metric | Score | DDL | Industry Median |
| Price/Sales | 4 | 0.10 | 1.30 |
| Price/Earnings | na | na | 18.3 |
| EV/EBITDA | na | na | 13.3 |
| Shareholder Yield | 51 | (0.3%) | (1.3%) |
| Price/Book Value | 83 | 5.21 | 1.90 |
| Price/Free Cash Flow | 19 | 6.7 | 21.7 |
Dingdong (Cayman) Ltd is a China-based e-commerce company. The Company offers groceries and other daily necessities directly delivered to users and households. The Company’s groceries offerings include fresh produce, meat and seafood and other daily necessities. The Company procure its products primarily from direct upstream sources such as farms and cooperatives. The Company’s frontline fulfillment grid consists of more than 950 frontline fulfillment stations across 29 cities in China. Its frontline fulfillment grid is also supported by approximately 40 regional processing centers to sort, package, label and store raw products prior to fulfillment.
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.
Dingdong (Cayman) Ltd (ADR) has a Value Score of 66, which is considered to be undervalued.
Dingdong (Cayman) Ltd (ADR)’s price-to-book ratio is lower than its peers. This could make Dingdong (Cayman) Ltd (ADR) more attractive for value investors when compared to the industry median at 1.90.
You can read more about Dingdong (Cayman) Ltd (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.
Stitch Fix Inc’s Value Grade
Value Grade:
| Metric | Score | SFIX | Industry Median |
| Price/Sales | 11 | 0.26 | 1.30 |
| Price/Earnings | na | na | 18.3 |
| EV/EBITDA | na | na | 13.3 |
| Shareholder Yield | 71 | (3.8%) | (1.3%) |
| Price/Book Value | 52 | 1.74 | 1.90 |
| Price/Free Cash Flow | 17 | 6.1 | 21.7 |
Stitch Fix, Inc. delivers personalization to its clients. The Company operates in the United States and United Kingdom. The Company offers merchandise at multiple price points and styles from established brands, as well as its own private labels. The Company offers two types of Fix scheduling: Auto-ship, where a client can elect to auto-ship fixes every two to three weeks, monthly, bi-monthly, or quarterly; an on-demand option allows clients to schedule a one-time Fix at any time, either instead of or in addition to utilizing the auto-ship option. On-demand clients are prompted to schedule their next Fix each time they check out. The Company’s Fix is a Stitch Fix-branded box containing a personalized assortment of apparel, shoes, and accessories informed by its algorithms and sent by StitchFix stylists and delivered to the clients.
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.
Stitch Fix Inc has a Value Score of 69, which is considered to be undervalued.
Stitch Fix Inc’s price-to-book ratio is higher than its peers. This could make Stitch Fix Inc less attractive for value investors when compared to the industry median at 1.90.
You can read more about Stitch Fix 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.
Upexi Inc’s Value Grade
Value Grade:
| Metric | Score | UPXI | Industry Median |
| Price/Sales | 10 | 0.25 | 1.30 |
| Price/Earnings | na | na | 18.3 |
| EV/EBITDA | na | na | 13.3 |
| Shareholder Yield | 86 | (21.1%) | (1.3%) |
| Price/Book Value | 24 | 0.87 | 1.90 |
| Price/Free Cash Flow | na | na | 21.7 |
Upexi, Inc. is a multi-faceted brand owner with brands in the health, wellness, pet, beauty, and other growing markets. The Company focuses on direct-to-consumer and Amazon brands. The Company utilizes its in-house software-as-a-service (SaaS) programmatic advertising technology to help achieve a lower cost per acquisition and accumulate consumer data for increased cross-selling between its growing portfolio of brands. Its Branded Product segment is focused on the development, growth, and distribution of the branded products that the Company own. Its Recommerce segment is focused on the purchase and sale of new and used products through channels, such as Amazon and wholesale distributors. The Company’s brands include VitaMedica, Tytan Tiles, and others. VitaMedica offers clinician-originated nutraceuticals and cosmeceuticals products. VitaMedica’s sales model includes wholesale distribution through surgeons and med spas and direct to consumers through e-commerce and marketplaces.
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.
Upexi Inc has a Value Score of 65, which is considered to be undervalued.
Upexi Inc’s price-to-book ratio is higher than its peers. This could make Upexi Inc less attractive for value investors when compared to the industry median at 1.90.
You can read more about Upexi 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.
Vacasa Inc’s Value Grade
Value Grade:
| Metric | Score | VCSA | Industry Median |
| Price/Sales | 4 | 0.10 | 1.30 |
| Price/Earnings | na | na | 18.3 |
| EV/EBITDA | 11 | 3.6 | 13.3 |
| Shareholder Yield | 79 | (9.5%) | (1.3%) |
| Price/Book Value | 14 | 0.60 | 1.90 |
| Price/Free Cash Flow | na | na | 21.7 |
Vacasa, Inc. is engaged in providing a vacation rental management platform in North America. The Company's integrated technology and operations platform is designed to optimize vacation rental income and home care for homeowners, offer guests an experience, and provide distribution partners with a variety of home listings. The Company's Guest app, Vacasa.com, helps guests to search, discover and book properties. The Guests from around the world utilize the Company?s technology and services to search and book Vacasa-listed properties in the United States, Belize, Canada, Costa Rica, and Mexico. The Company provides home care solutions provided directly to homeowners such as home maintenance and improvement services, linen and towel supply programs, supplemental housekeeping services, and other related services. The Company also provides other offerings, such as real estate brokerage services and residential management services to community and homeowner associations.
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.
Vacasa Inc has a Value Score of 88, which is considered to be undervalued.
Vacasa Inc’s price-to-book ratio is higher than its peers. This could make Vacasa Inc less attractive for value investors when compared to the industry median at 1.90.
You can read more about Vacasa 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.
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 7 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.
- Alibaba Group Holding Ltd - ADR stock has a Value Grade of B.
- Buzzfeed Inc stock has a Value Grade of A.
- Baozun Inc (ADR) stock has a Value Grade of A.
- Dingdong (Cayman) Ltd (ADR) stock has a Value Grade of B.
- Stitch Fix Inc stock has a Value Grade of B.
- Upexi Inc stock has a Value Grade of B.
- Vacasa Inc stock has a Value Grade of A.
Now that you have a bit more background about each of the 7 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.
- 7 Undervalued Online Services Stocks for Friday, February 09
- 5 Undervalued Online Services Stocks for Thursday, February 08
- What You Need to Know About Doximity Inc's Q3 Earnings
- What You Need to Know About Pinterest Inc's Q4 Earnings
AAII Disclaimer
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