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, March 04, 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.

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.

Hong Kong Technology Ventre Co Ltd (ADR)’s Value Grade

Value Grade:

Hong Kong Technology Venture Co Ltd, formerly Hong Kong Television Network Ltd, is an investment holding company principally engaged in the provision of multimedia business. The Company engages in the provision of multimedia production and contents distribution as well as operating a 24-hour e-Shopping Mall, providing a one-stop shop platform including online shopping, delivery service and customer experience. The Company also involves in the provision of technology on an integrated end-to-end eCommerce solution including hardware and software systems as a service aiming to enable traditional supermarkets or retailers locally and globally to enter into digital retailing.

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.

Hong Kong Technology Ventre Co Ltd (ADR) has a Value Score of 87, which is considered to be undervalued.

When you look at Hong Kong Technology Ventre Co Ltd (ADR)’s price-to-sales ratio at 0.47 compared to the industry median at 1.46, this company has a lower price relative to revenue compared to its peers. This could make Hong Kong Technology Ventre Co Ltd (ADR)’s stock more attractive for value investors.

Hong Kong Technology Ventre Co Ltd (ADR)’s price-earnings ratio is 13.38 compared to the industry median at 25.16. This means it has a lower share price relative to earnings compared to its peers. This could make Hong Kong Technology Ventre Co Ltd (ADR) more attractive for value investors.

Now, let’s assess Hong Kong Technology Ventre Co Ltd (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 10.7, when compared to the industry median of 13.2, 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. Hong Kong Technology Ventre Co Ltd (ADR)’s shareholder yield is higher than its industry median ratio of (1.38%). 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. Hong Kong Technology Ventre Co Ltd (ADR)’s price-to-book ratio is lower than its industry median ratio of 2.00. This could make Hong Kong Technology Ventre Co Ltd (ADR) more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Hong Kong Technology Ventre Co 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. Hong Kong Technology Ventre Co Ltd (ADR)’s price-to-free-cash-flow ratio is lower than its industry median ratio of 26.02. This could make Hong Kong Technology Ventre Co Ltd (ADR) more attractive because the lower P/FCF ratio indicates that Hong Kong Technology Ventre Co 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.

IZEA Worldwide Inc’s Value Grade

Value Grade:

IZEA Worldwide, Inc. is a marketing technology company providing software and professional services that enable brands to collaborate and transact with the full spectrum of social influencers and content creators. It creates and operate online software services that connect marketers, including brands, agencies, and publishers, with content creators such as Instagram influencers, TikTok influencers, YouTube stars, designers, photographers, and writers (creators) and provide marketers access to its industry expertise, data, and analytics. Its platforms include The IZEA Exchange (IZEAx), BrandGraph, Shake, The Creator Marketplace, and IZEA Flex (Flex). The IZEAx platform is designed to provide an ecosystem that enables the creation and publication of multiple types of custom content through a creator's websites, blogs, or social media channels, including Twitter, Facebook, Instagram, and YouTube, among others. Its subsidiaries include IZEA Canada, Inc., and Hoozu Holdings Limited.

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.

IZEA Worldwide Inc has a Value Score of 95, which is considered to be undervalued.

IZEA Worldwide Inc’s price-to-book ratio is higher than its peers. This could make IZEA Worldwide Inc less attractive for value investors when compared to the industry median at 2.00.

You can read more about IZEA Worldwide 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.

Playtika Holding Corp’s Value Grade

Value Grade:

Playtika Holding Corp is a developer of mobile games. The Company’s Playtika Boost Platform provides live game operations services and a proprietary technology to support portfolio of games. The Company owns and manages 15 games. It includes both casual and casino-themed games. The Company also provides free-to-play mobile games. The Company distributes its games through various web and mobile platforms such as Apple, Facebook, Google, and other web and mobile platforms. The Company’s games include Slotomania, Bingo Blitz, House of Fun, Caesars Slots, World Series of Poker, Best Fiends, June’s Journey, Solitaire Grand Harvest, and Board Kings. The Company’s games are available on iOS App Store and Google Play Store.

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.

Playtika Holding Corp has a Value Score of 88, which is considered to be undervalued.

Playtika Holding Corp’s price-earnings ratio is 14.4 compared to the industry median at 25.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Playtika Holding Corp more attractive for value investors.

You can read more about Playtika Holding Corp’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.

ContextLogic Inc’s Value Grade

Value Grade:

ContextLogic Inc. is a mobile e-commerce company. The Company provides discovery-based shopping platform, which connects merchants' products to users based on user preferences. It combines technology and data science capabilities and a discovery-based mobile shopping experience to create a visual, entertaining, and personalized shopping experience for its users. It incorporates gamified features and user-generated content including photos, videos, and reviews, and a range of products to improve the shopping experience. Its Wish Platform connects over 24 million monthly active users across 170,000 active global merchants. Its platform includes a merchant dashboard with built-in analytics to help merchants sell more products and track their performance. ProductBoost is its native advertising tool for merchants, which helps them promote their products on Company's platform. Its logistics offerings provide direct end-to-end single order shipment from a merchant’s location to the user.

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.

ContextLogic Inc has a Value Score of 88, which is considered to be undervalued.

ContextLogic Inc’s price-to-book ratio is higher than its peers. This could make ContextLogic Inc less attractive for value investors when compared to the industry median at 2.00.

You can read more about ContextLogic 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.

Yunji Inc (ADR)’s Value Grade

Value Grade:

Yunji Inc. is a China-based company principally involved in social e-commerce business. The Company conducts its businesses mainly through a membership-based model. The Company offers products across a large variety of categories with the aim of catering to daily needs of their users and their households. The Company distributes its products primarily through Yunji Application (App) and mini programs and HTML-5 webpages available in major social platforms in China, including WeChat, QQ, Weibo.

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.

Yunji Inc (ADR) has a Value Score of 82, which is considered to be undervalued.

Yunji Inc (ADR)’s price-to-book ratio is higher than its peers. This could make Yunji Inc (ADR) less attractive for value investors when compared to the industry median at 2.00.

You can read more about Yunji 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.

Zhihu Inc - ADR’s Value Grade

Value Grade:

Zhihu Inc is a China-based holding company principally engaged in the operation of online question-and-answer (Q&A;) communities. The Company is principally engaged in the provision of advertising services, paid membership services, content monetization solutions and other services. The Company's online community provides a platform for users to find solutions, make decisions, find inspiration and have fun. The Company's online community is an online content community based on user-generated content (UGC). In addition, the Company's platform offers a range of contents such as daily life choices, esoteric knowledge content or unique experiences, and important life choices.

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.

Zhihu Inc - ADR has a Value Score of 91, which is considered to be undervalued.

Zhihu Inc - ADR’s price-to-book ratio is higher than its peers. This could make Zhihu Inc - ADR less attractive for value investors when compared to the industry median at 2.00.

You can read more about Zhihu 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.

• Hong Kong Technology Ventre Co Ltd (ADR) stock has a Value Grade of A.
• IZEA Worldwide Inc stock has a Value Grade of A.
• Playtika Holding Corp stock has a Value Grade of A.
• ContextLogic Inc stock has a Value Grade of A.
• Yunji Inc (ADR) stock has a Value Grade of A.
• Zhihu Inc - ADR stock has a Value Grade of A.

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, March 04
• 5 Undervalued Online Services Stocks for Friday, March 01
• Beyond the Numbers: Getting Started With Financial Statements
• Don't Let the S&P; 500's Milestone Blind You to Past Downturns

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.