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 Wednesday, July 03, 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.

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.

When you look at Dada Nexus Ltd - ADR’s price-to-sales ratio at 0.27 compared to the industry median at 1.39, this company has a lower price relative to revenue compared to its peers. This could make Dada Nexus Ltd - ADR’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. Dada Nexus Ltd - ADR’s shareholder yield is lower than its industry median ratio of (1.15%). 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. Dada Nexus Ltd - ADR’s price-to-book ratio is lower than its industry median ratio of 1.99. This could make Dada Nexus Ltd - ADR more attractive to investors looking for a new addition to their portfolio.

Douyu International Holdings Ltd (ADR)’s Value Grade

Value Grade:

Douyu International Holdings Ltd is a company principally engaged in the operation of a game-centric livestreaming platform. The Company operates the platform both on mobile applications and personal computer portals, through which users can enjoy games and entertainment livestreaming, access to video and graphic contents, and participate in community events and discussions. The Company mainly operates its businesses 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.

Douyu International Holdings Ltd (ADR) has a Value Score of 71, which is considered to be undervalued.

Douyu International Holdings Ltd (ADR)’s price-earnings ratio is 4.3 compared to the industry median at 27.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Douyu International Holdings Ltd (ADR) more attractive for value investors.

Douyu International Holdings Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make Douyu International Holdings Ltd (ADR) less attractive for value investors when compared to the industry median at 1.99.

You can read more about Douyu International Holdings 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.

E Automotive Inc’s Value Grade

Value Grade:

E Automotive Inc. is a Canada-based company, which is engaged in the business of providing a digital wholesale auction marketplace, and developing, marketing and distributing digital retailing software supporting the automotive industry. The Company has a digital platform (the Platform), which provides automotive dealerships with access to an online wholesale auction marketplace where the Company purchases or sells vehicles to other dealers, as well as access software solutions to support dealers' digital retailing and inventory management. Access to its Platform is complemented by ancillary service offerings to assist dealers with supplementary auction-related needs, along with driving consumer traffic to their digital properties and optimizing other business processes. The Company’s digital wholesale marketplace goes to market under the brand EBlock, and its digital suite of retail products goes to market under the brand EDealer.

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.

E Automotive Inc has a Value Score of 87, which is considered to be undervalued.

E Automotive Inc’s price-to-book ratio is higher than its peers. This could make E Automotive Inc less attractive for value investors when compared to the industry median at 1.99.

You can read more about E Automotive 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.

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. The Company partners with marketers to facilitate influencer marketing campaigns. It assists brands in generating more custom generated content (CGC) through dedicated programs aimed at boosting online visibility and driving sales. It collaborates with marketers to supplement or replace their content development initiatives on their Website, social media, and other channels. Its primary software platforms include IZEA Flex and IZEA.com. Each of these platforms is designed to facilitate specific aspects of collaborations between creators and brands. IZEA Flex is its flagship platform for enterprise influencer marketing. IZEA.com provides creators with tools to present their work to marketers (Listings). Zuberance by IZEA is an advocate marketing solutions provider.

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 99, 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 1.99.

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.

Vroom Inc’s Value Grade

Value Grade:

Vroom, Inc. owns and operates United Auto Credit Corporation (UACC), an automotive finance company that offers vehicle financing to its customers through third party dealers under the UACC brand. The Company also operates CarStory, an artificial intelligence (AI)-powered analytics and digital services for automotive retail.

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.

Vroom Inc has a Value Score of 90, which is considered to be undervalued.

Vroom Inc’s price-to-book ratio is higher than its peers. This could make Vroom Inc less attractive for value investors when compared to the industry median at 1.99.

You can read more about Vroom 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.

Weibo Corp (ADR)’s Value Grade

Value Grade:

Weibo Corp is a China-based company mainly engaged in social media advertising business. The Company operates two segments. Advertising and Marketing segment mainly provides a full range of advertising customization and marketing solutions. Value-added Services segment mainly provides services such as membership services on social platforms, online games, live broadcasts, social e-commerce and others. The Company also engages in internet and other related businesses, including the provision of internet content and online game operations. The Company's users can create, discover, consume and share various formats of content, including text, photo, video, live streaming and audio on the Weibo platform. The Company's main product is the social platform 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.

Weibo Corp (ADR) has a Value Score of 88, which is considered to be undervalued.

Weibo Corp (ADR)’s price-earnings ratio is 6.8 compared to the industry median at 27.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Weibo Corp (ADR) more attractive for value investors.

Weibo Corp (ADR)’s price-to-book ratio is higher than its peers. This could make Weibo Corp (ADR) less attractive for value investors when compared to the industry median at 1.99.

You can read more about Weibo Corp (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.

Yalla Group Ltd - ADR’s Value Grade

Value Grade:

Yalla Group Ltd is a United Arab Emirates-based entity which is operating as holding company. The Company through its subsidiaries is operating in one segment, which is the social networking and entertainment platform. The Company operates a voice-centric social networking and entertainment platform in the Middle East and North Africa region. The Company’s mobile application, Yalla facilitates online voice-based chatting among users or voice live streaming, and Yalla Ludo provides a platform for board games such as Ludo and Domino. The platform allows individual users free access to the basic functions on the platform. The Company operates its business through Yalla United Arab Emirates (UAE), Hangzhou Yale and Shenzhen Moov. Yalla UAE functions as its primary business operation center and engages in sales, marketing, customer service and other business operations. Hangzhou Yale performs technology and product development functions.

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.

Yalla Group Ltd - ADR has a Value Score of 72, which is considered to be undervalued.

Yalla Group Ltd - ADR’s price-earnings ratio is 6.4 compared to the industry median at 27.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Yalla Group Ltd - ADR more attractive for value investors.

Yalla Group Ltd - ADR’s price-to-book ratio is higher than its peers. This could make Yalla Group Ltd - ADR less attractive for value investors when compared to the industry median at 1.99.

You can read more about Yalla Group 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 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.

• Dada Nexus Ltd - ADR stock has a Value Grade of A.
• Douyu International Holdings Ltd (ADR) stock has a Value Grade of B.
• E Automotive Inc stock has a Value Grade of A.
• IZEA Worldwide Inc stock has a Value Grade of A.
• Vroom Inc stock has a Value Grade of A.
• Weibo Corp (ADR) stock has a Value Grade of A.
• Yalla Group Ltd - ADR stock has a Value Grade of B.

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 Wednesday, July 03
• 7 Undervalued Online Services Stocks for Tuesday, July 02
• Is Webtoon Entertainment Inc (WBTN) Stock a Good Investment?
• Why Fiverr International Ltd’s (FVRR) Stock Is Down 4.14%

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.