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, September 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.

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 69, which is considered to be undervalued.

When you look at CISO Global Inc’s price-to-sales ratio at 0.12 compared to the industry median at 1.37, 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 (1.32%). 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 1.85. This could make CISO Global Inc more attractive to investors looking for a new addition to their portfolio.

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 88, which is considered to be undervalued.

Hong Kong Technology Ventre Co Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make Hong Kong Technology Ventre Co Ltd (ADR) less attractive for value investors when compared to the industry median at 1.85.

You can read more about Hong Kong Technology Ventre Co 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.

Outbrain Inc’s Value Grade

Value Grade:

Outbrain Inc. is a technology platform company that drives business results by connecting media owners and advertisers with engaged audiences to drive business outcomes. The Company’s artificial intelligence (AI) prediction engine powers a two-sided platform for advertisers and media owners that delivers concrete business outcomes. Its platform enables thousands of digital media owners to provide experiences to their audiences, delivering audience engagement and monetization. The Company’s platform provides a suite of solutions specifically to meet the needs of media owners. Its comprehensive media owner suite brings advanced AI-backed prediction technology to the Open Internet, enabling its media partners to enhance their businesses through sustainable monetization, robust audience development, and efficient revenue diversification. It offers a full-stack, cross-funnel advertising solution for advertisers of all sizes from enterprise brands and the agencies.

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.

Outbrain Inc has a Value Score of 85, which is considered to be undervalued.

Outbrain Inc’s price-to-book ratio is higher than its peers. This could make Outbrain Inc less attractive for value investors when compared to the industry median at 1.85.

You can read more about Outbrain 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.

OLB Group Inc’s Value Grade

Value Grade:

The OLB Group, Inc. is a diversified Fintech eCommerce merchant services provider. Its eCommerce platform delivers cloud-based merchant services for a digital commerce solution to thousands of merchants in all 50 states. It seeks to provide merchants with a range of products and services through its various online platforms, including financial and transaction processing services. Its business functions through three subsidiaries: eVance, Inc. (eVance), OmniSoft.io, Inc. (OmniSoft), and CrowdPay.Us, Inc. (CrowdPay). OmniSoft operates a cloud-based business management platform that provides turnkey solutions for merchants to enable them to build and manage their retail businesses. eVance provides competitive payment processing solutions to merchants, which enable merchants to process credit and debit card-based Internet payments for sales of their products. CrowdPay operates a white label capital raising platform that targets small and midsized businesses seeking to raise capital.

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.

OLB Group Inc has a Value Score of 79, which is considered to be undervalued.

OLB Group Inc’s price-to-book ratio is higher than its peers. This could make OLB Group Inc less attractive for value investors when compared to the industry median at 1.85.

You can read more about OLB Group 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.

Skillz Inc’s Value Grade

Value Grade:

Skillz Inc. (Skillz) is a mobile games platform. The Skillz platform helps developers create franchises. The Company hosts various casual eSports tournaments for various mobile players worldwide. Its technology platform aligns the interests of developers and gamers with respect to user monetization. It monetizes user engagement primarily through prizes. The Company offers a range of gaming experiences for users. It enables game genres that can be played asynchronously, synchronously or turn-based synchronously. Its end-to-end technology platform enables mobile game developers to improve gameplay experiences and drive improved engagement, retention and revenue from their content. It offers an integrated software development kit (SDK), which contains over 200 features, including various social features, such as in-game chat, friends, tournaments and leagues, which allow players to interact and build relationships in the player community.

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.

Skillz Inc has a Value Score of 99, which is considered to be undervalued.

Skillz Inc’s price-to-book ratio is higher than its peers. This could make Skillz Inc less attractive for value investors when compared to the industry median at 1.85.

You can read more about Skillz 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.

ThredUp Inc’s Value Grade

Value Grade:

ThredUp Inc. provides online resale platforms for apparel, shoes, and accessories. The Company's custom-built operating platform consists of distributed processing infrastructure, software and systems and data science expertise. Its operating platform is the foundation for its managed marketplace where the Company has bridged online and offline technology to make the buying and selling of tens of millions of items simple. The marketplaces the Company has built enable buyers in the United States and in Europe to browse and purchase resale items for primarily apparel, shoes and accessories across a range of price points. Buyers get shopping value, premium and luxury brands all in one place, at up to 90% off estimated retail price. In addition to the Company's core marketplace, various brands and retailers are using its resale-as-a-service (RaaS) offering, which allows them to conveniently offer a scalable closet clean out service and/or resale shop to their 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.

ThredUp Inc has a Value Score of 69, which is considered to be undervalued.

ThredUp Inc’s price-to-book ratio is higher than its peers. This could make ThredUp Inc less attractive for value investors when compared to the industry median at 1.85.

You can read more about ThredUp 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.

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.
• Hong Kong Technology Ventre Co Ltd (ADR) stock has a Value Grade of A.
• Outbrain Inc stock has a Value Grade of A.
• OLB Group Inc stock has a Value Grade of B.
• Skillz Inc stock has a Value Grade of A.
• ThredUp Inc stock has a Value Grade of B.

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, September 10
• 5 Undervalued Online Services Stocks for Monday, September 09
• Why ACV Auctions Inc’s (ACVA) Stock Is Up 6.00%
• Why Beyond Inc’s (BYON) Stock Is Up 4.06%

AAII Disclaimer

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