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 Tuesday, June 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.

CISO Global Inc’s Value Grade

Value Grade:

CISO Global, Inc. is a cybersecurity and compliance company. The Company provides a full range of cybersecurity consulting and related services, encompassing compliance, cybersecurity, and culture. It offers two types of services to clients, including security managed services and professional services. The Company's services include compliance services, secured managed services, security operations center (SOC) services, virtual Chief Information Security Officer (vCISO) services, incident response, certified forensics, technical assessments, and cybersecurity training. Its compliance practice ensures the customers are implementing the right controls, prioritizing risks, and investing in the remediation to comply and adhere to applicable industry standards and guidelines. Its SOC provides 24x7 threat monitoring, alerting, validation, and proactive threat hunting. It provides security testing services, including penetration testing, attack simulation exercises, and training programs.

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.

CISO Global Inc has a Value Score of 70, which is considered to be undervalued.

When you look at CISO Global Inc’s price-to-sales ratio at 0.16 compared to the industry median at 1.42, this company has a lower price relative to revenue compared to its peers. This could make CISO Global 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. CISO Global Inc’s shareholder yield is lower than its industry median ratio of (1.51%). 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. CISO Global Inc’s price-to-book ratio is lower than its industry median ratio of 2.25. This could make CISO Global Inc more attractive to investors looking for a new addition to their portfolio.

Curiositystream Inc’s Value Grade

Value Grade:

CuriosityStream Inc. is a media and entertainment company that offers video and audio programming across the principal categories of factual entertainment, including science, history, society, nature, lifestyle and technology. The Company provides factual entertainment that informs, enchants and inspires. It provides advertising and sponsorships services through developing integrated digital brand partnerships designed to offer the chance to be associated with CuriosityStream content in a variety of forms, including short- and long-form program integration; branded social media promotional videos; broadcast advertising spots in its video and audio programs that are made available on its linear programming channels or in front of the paywall; and its increasing focus on digital display ads while delivering its content through advertising-based video-on-demand, transactional video-on-demand, free advertising-supported streaming television, YouTube and other similar distribution channels.

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.

Curiositystream Inc has a Value Score of 81, which is considered to be undervalued.

Curiositystream Inc’s price-to-book ratio is higher than its peers. This could make Curiositystream Inc less attractive for value investors when compared to the industry median at 2.25.

You can read more about Curiositystream 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.

Grom Social Enterprises Inc’s Value Grade

Value Grade:

Grom Social Enterprises, Inc. is a media, technology, and entertainment company. The Company focuses on delivering content to children under the age of 13 years in a safe, secure platform that can be monitored by parents or guardians. The Company conducts its business through subsidiaries, including Grom Social, Inc. (GSOC), TD Holdings Limited (TDH), Grom Educational Services, Inc. (GEDU), Grom Nutritional Services, Inc. (GNUT) and Curiosity Ink Media, LLC (CIM). GSOC operates its social media network designed for children under the age of 13 years. TDH operates through two subsidiaries: Top Draw Animation Hong Kong Limited and Top Draw Animation, Inc., which are engaged in the production of animated films and television series. GEDU operates its Web filtering services provided to schools and government agencies. CIM is a kids and family original content and media company that focuses on building and managing entertainment brands and franchises.

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.

Grom Social Enterprises Inc has a Value Score of 67, which is considered to be undervalued.

Grom Social Enterprises Inc’s price-to-book ratio is higher than its peers. This could make Grom Social Enterprises Inc less attractive for value investors when compared to the industry median at 2.25.

You can read more about Grom Social Enterprises 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.

Live World Inc’s Value Grade

Value Grade:

LiveWorld, Inc. is a digital agency specializing in social media and technology solutions. It provides consulting, strategy, and creative along with human agents for moderation, engagement, customer care, and adverse events management and conversation management software, and chatbots for digital campaigns and social media programs. Its solutions include digital agency services, moderation services, adverse events management and social customer service. Its digital agency services include strategy, research and planning; technology and digital solutions; process consulting; design and production; conversation engagement, and insights and analytics. Its social media moderation services are designed to handle multi-language brands. Its adverse events management services include 24/7 brand protection; real-time AE detection and review; escalation and routing, and escalation and routing. Its clients include various brands in pharmaceuticals, healthcare, and financial-travel services.

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.

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

Live World Inc’s price-to-book ratio is higher than its peers. This could make Live World Inc less attractive for value investors when compared to the industry median at 2.25.

You can read more about Live World 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.

Next Technology Holding Inc’s Value Grade

Value Grade:

Next Technology Holding Inc is a China-based company mainly providing technical services and solutions via its social e-commerce platform. The Company mainly provides an international cloud-based intelligence system and independently developed a micro-business cloud intelligence system called the YCloud. It provides technical and auto-billing management services to micro-business online stores in China through big data analytics, machine learning mechanisms, social network recommendations, and multi-channel data analysis.

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.

Next Technology Holding Inc has a Value Score of 72, which is considered to be undervalued.

Next Technology Holding Inc’s price-to-book ratio is higher than its peers. This could make Next Technology Holding Inc less attractive for value investors when compared to the industry median at 2.25.

You can read more about Next Technology Holding 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.

Sohu.com Ltd - ADR’s Value Grade

Value Grade:

Sohu.com Ltd is a China-based company mainly engaged in brand advertising business and online game business. The Company primarily operates through two segments. The Sohu segment is mainly engaged in the brand advertising business. The Changyou segment is mainly engaged in the operation of Changyou online game business and the 17173.com Website. The Company primarily operates in the domestic market.

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.

Sohu.com Ltd - ADR has a Value Score of 96, which is considered to be undervalued.

Sohu.com Ltd - ADR’s price-to-book ratio is higher than its peers. This could make Sohu.com Ltd - ADR less attractive for value investors when compared to the industry median at 2.25.

You can read more about Sohu.com 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.

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.

• CISO Global Inc stock has a Value Grade of B.
• Curiositystream Inc stock has a Value Grade of A.
• Grom Social Enterprises Inc stock has a Value Grade of B.
• Live World Inc stock has a Value Grade of B.
• Next Technology Holding Inc stock has a Value Grade of B.
• Sohu.com Ltd - 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 Tuesday, June 04
• 6 Undervalued Online Services Stocks for Monday, June 03
• Why Duolingo Inc’s (DUOL) Stock Is Up 4.78%
• Why EverQuote Inc’s (EVER) Stock Is Down 7.45%

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.