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 10, 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.

Jianpu Technology Inc - ADR’s Value Grade

Value Grade:

Jianpu Technology Inc is a China-based company principally engaged in the provision of open platform for discovery and recommendation of financial products in China. The Company, through its technology, provides users with personalized search results and recommendations that are tailored to each user's particular financial needs and credit profile. Financial service providers offer a wide variety of financial products on its platform, including consumer and other loans, credit cards, and wealth management products. The Company also provides a wide range of services and solutions to financial service providers on its platform, including sales and marketing solutions, big data risk management solutions and integrated solutions through Gold Cloud. The Company also provides professional content on financial products, the financial industry and personal finances in many forms, including short videos, audio, online articles and offline booklets and handouts.

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.

Jianpu Technology Inc - ADR has a Value Score of 97, which is considered to be undervalued.

When you look at Jianpu Technology Inc - ADR’s price-to-sales ratio at 0.08 compared to the industry median at 1.33, this company has a lower price relative to revenue compared to its peers. This could make Jianpu Technology Inc - 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. Jianpu Technology Inc - ADR’s shareholder yield is higher 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. Jianpu Technology Inc - ADR’s price-to-book ratio is lower than its industry median ratio of 2.04. This could make Jianpu Technology Inc - ADR more attractive to investors looking for a new addition to their portfolio.

Baidu Inc (ADR)’s Value Grade

Value Grade:

Baidu Inc is a Chinese language Internet search provider. The Company offers a Chinese language search platform on its Baidu.com Website that enables users to find information online, including Webpages, news, images, documents and multimedia files, through links provided on its Website. The Company operates through two segments, Baidu Core segment and iQIYI segment. Baidu Core mainly provides search-based, feed-based, and other online marketing services, as well as products and services from the Company’s new artificial intelligence (AI) initiatives. Within Baidu Core, the Company’s product and services offerings are categorized as Mobile Ecosystem, Baidu AI Cloud and Intelligent Driving & Other Growth Initiatives. iQIYI is an online entertainment service provider that offers original, professionally produced and partner-generated content on its platform.

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.

Baidu Inc (ADR) has a Value Score of 65, which is considered to be undervalued.

Baidu Inc (ADR)’s price-earnings ratio is 12.8 compared to the industry median at 26.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Baidu Inc (ADR) more attractive for value investors.

Baidu Inc (ADR)’s price-to-book ratio is higher than its peers. This could make Baidu Inc (ADR) less attractive for value investors when compared to the industry median at 2.04.

You can read more about Baidu 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.

Beachbody Company Inc’s Value Grade

Value Grade:

The Beachbody Company, Inc. is a subscription health and wellness company. The Company's products include digital subscriptions, nutritional products and connected fitness products. Its digital subscriptions include BOD and a live interactive premium subscription, BODi. The Company's digital platforms provide a one-stop-shop for all types of fitness and nutrition content, with brands such as P90X, Insanity, 21 Day Fix, 80 Day Obsession, LIIFT4, Unstress Meditations, Portion Fix, 4 Weeks of Focus, Sure Thing, and others. The Company's nutrition-first programs, Portion Fix and 2B Mindset, teach healthy eating habits and promote healthy, sustainable weight loss. Its offerings deliver both fitness and nutritional content, and personal development mindset content. Its nutritional products include Shakeology, Beachbody Performance supplements, BEACHBARs and Bevvy supplements and others. Its digital subscription offerings are complemented by its connected fitness products acquired from Myx.

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.

Beachbody Company Inc has a Value Score of 75, which is considered to be undervalued.

Beachbody Company Inc’s price-to-book ratio is higher than its peers. This could make Beachbody Company Inc less attractive for value investors when compared to the industry median at 2.04.

You can read more about Beachbody Company 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 89, 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 2.04.

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.

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 75, which is considered to be undervalued.

CISO Global Inc’s price-to-book ratio is higher than its peers. This could make CISO Global Inc less attractive for value investors when compared to the industry median at 2.04.

You can read more about CISO Global 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.

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 2.04.

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.

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 70, which is considered to be undervalued.

Yalla Group Ltd - ADR’s price-earnings ratio is 6.5 compared to the industry median at 26.6. 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 2.04.

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.

• Jianpu Technology Inc - ADR stock has a Value Grade of A.
• Baidu Inc (ADR) stock has a Value Grade of B.
• Beachbody Company Inc stock has a Value Grade of B.
• Baozun Inc (ADR) stock has a Value Grade of A.
• CISO Global Inc stock has a Value Grade of B.
• Dada Nexus Ltd - 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 10
• 3 Undervalued Online Services Stocks for Tuesday, July 09
• Why Baidu Inc (ADR)’s (BIDU) Stock Is Up 8.47%
• Why Bilibili Inc - ADR’s (BILI) Stock Is Up 4.44%

AAII Disclaimer

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