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 Friday, June 21, 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.

Antelope Enterprise Holdings Ltd’s Value Grade

Value Grade:

Antelope Enterprise Holdings Ltd is an investment holding company mainly engaged in livestreaming Ecommerce business. The Company operates business through two segments. The Livestreaming Ecommerce Business segment is primarily engaged in providing one-stop solution for customers to enable them to utilize the growing sales channel of livestreaming ecommerce. The Business Management and Consulting Business segment is principally engaged in the provision of corporate management and consulting services, including computer consulting services and software development.

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.

Antelope Enterprise Holdings Ltd has a Value Score of 70, which is considered to be undervalued.

When you look at Antelope Enterprise Holdings Ltd’s price-to-sales ratio at 0.08 compared to the industry median at 1.28, this company has a lower price relative to revenue compared to its peers. This could make Antelope Enterprise Holdings Ltd’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. Antelope Enterprise Holdings Ltd’s shareholder yield is lower than its industry median ratio of (1.23%). 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. Antelope Enterprise Holdings Ltd’s price-to-book ratio is lower than its industry median ratio of 2.14. This could make Antelope Enterprise Holdings Ltd more attractive to investors looking for a new addition to their portfolio.

Brightcove Inc’s Value Grade

Value Grade:

Brightcove Inc. is a cloud-based streaming technology and services company. The Company's software platform and suite of solutions include offerings that meet the needs of media and enterprise customers in a variety of industries across the globe with their use of streaming video. Its solutions and products include Brightcove Marketing Studio, Brightcove Communications Studio, Brightcove Media Studio, Brightcove Audience Insights, Zencode, and Brightcove Beacon. Brightcove Communications Studio is for marketers and corporate communications professionals who need tools to deliver information in an engaging, secure, and scalable manner through live and on-demand content. Brightcove Media Studio is a comprehensive solution for over-the-top video services, media publishers and broadcasters looking to monetize their media, live stream at scale and nurture their audience lifecycle. Brightcove Audience Insights is a customer data platform specifically designed for video streaming businesses.

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.

Brightcove Inc has a Value Score of 78, which is considered to be undervalued.

Brightcove Inc’s price-to-book ratio is higher than its peers. This could make Brightcove Inc less attractive for value investors when compared to the industry median at 2.14.

You can read more about Brightcove 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:

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 90, 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 2.14.

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.

Dada Nexus Ltd - ADR’s Value Grade

Value Grade:

Dada Nexus Ltd is a China-based holding company principally involved in the operation of local on-demand retail and delivery platforms. The Company’s main platforms are JD-Daojia (JDDJ) and Dada Now. JDDJ is an on-demand retail platform operated in China. It facilitates digitalized transformation for retailers and brand owners on selling products through online channels. Dada Now is a China-based on-demand delivery platform using a crowdsourcing model to process on-demand delivery orders. The two platforms combined can deliver a range of products, including the goods from supermarkets and convenience stores, fresh fruits and vegetables and drugs, to the customers.

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.

Dada Nexus Ltd - ADR has a Value Score of 83, which is considered to be undervalued.

Dada Nexus Ltd - ADR’s price-to-book ratio is higher than its peers. This could make Dada Nexus Ltd - ADR less attractive for value investors when compared to the industry median at 2.14.

You can read more about Dada Nexus 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.

HUYA Inc - ADR’s Value Grade

Value Grade:

HUYA Inc is a China-based holding company principally engaged in the operation of game live streaming platforms. The Company cooperates with e-sports event organizers, game developers and publishers to develop e-sports live streaming. Its game contents include gameplay, e-sports tournament events and other e-sports game shows. The Company also offers non-game entertainment content, such as talent shows, anime and outdoor activities. The Company’s platforms include its Huya Live mobile application (app), website www.huya.com, and personal computer (PC) clients. It also develops and operates certain mobile games jointly with third-party distribution platforms, and game-related apps. The Company has also created an interactive online community in which a range of functions are provided for the users, including bullet chatting, real-time commenting and gifting. The Company conducts its businesses in 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.

HUYA Inc - ADR has a Value Score of 90, which is considered to be undervalued.

HUYA Inc - ADR’s price-to-book ratio is higher than its peers. This could make HUYA Inc - ADR less attractive for value investors when compared to the industry median at 2.14.

You can read more about HUYA 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.

Mogu Inc - ADR’s Value Grade

Value Grade:

Mogu Inc is a China-based company mainly engaged in the development and operation of online shopping platforms and providing brands with one-stop brand-wide integrated marketing solutions. The Company's online shopping platforms mainly include Mogujie mobile app and its Mini Programs on Weixin and its website Mogu.com. In addition, the Company also provides its users, especially female users, with more products based on their fashion and beauty consumption needs, including beauty makeup, personal care, food, medical beauty on its platform. And the Company also guides merchants to adjust the product structure by its platform, so as to deliver differentiated fashion products to its consumers.

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.

Mogu Inc - ADR has a Value Score of 85, which is considered to be undervalued.

Mogu Inc - ADR’s price-to-book ratio is higher than its peers. This could make Mogu Inc - ADR less attractive for value investors when compared to the industry median at 2.14.

You can read more about Mogu 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.

• Antelope Enterprise Holdings Ltd stock has a Value Grade of B.
• Brightcove Inc stock has a Value Grade of B.
• Baozun Inc (ADR) stock has a Value Grade of A.
• Dada Nexus Ltd - ADR stock has a Value Grade of A.
• HUYA Inc - ADR stock has a Value Grade of A.
• Mogu 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 Friday, June 21
• 7 Undervalued Online Services Stocks for Thursday, June 20
• Why Bilibili Inc - ADR’s (BILI) Stock Is Up 5.38%
• Why Coursera Inc’s (COUR) Stock Is Up 4.66%

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.