Advertising is typically the first expenditure cut amidst a recession. However, the economy is now reopening and people will soon be spending money on things aside from groceries and in-home entertainment. This means businesses will ramp up their marketing in an attempt to win the battle for consumer dollars.
In particular, the digital media industry is most likely to withstand a coronavirus recession simply because people are staring into screens of varying sorts now more than ever. Increased screen time means more exposure to digital ads. Boston Omaha Corporation (BOMN), The Trade Desk (TTD) and Interpublic Group of Companies (IPG) might emerge as bounce back candidates as the economy reopens.
The Trade Desk (TTD)
In most cases, ad quality matters much more than ad quantity. Truly productive ads are the most effective way to communicate a value proposition and develop the all-important rapport with target clients. TTD specializes in the placement of productive ads through programmatic advertising.
With consistent year-over-year revenue growth fueled by the use of strategic data to zero in on target customers, TTD has quickly developed into a marketing powerhouse. TTD ads appear in numerous destinations ranging from connected TVs to apps, online video and beyond. In particular, mobile video ads and connected TV ads are becoming that much more important as the use of these mediums continues to increase thanks to the ubiquity of the web.
TTD has had a customer retention rate above 95% for nearly six straight years. The POWR Ratings have TTD rated as a Strong Buy with As in every POWR component. All in all, the POWR Ratings rate TTD as the 6th best of 81 stocks in its space. As marketing spending resumes, TTD’s technology platform for advertising will return to prominence.
Look for TTD to escalate toward its 52-week high of $327.35 as the economy reopens.
Interpublic Group of Companies (IPG)
Staying in business amidst the recession is centered on winning new customers and retaining current customers. IPG helps businesses do just that. This marketing services company has communications agencies across the globe that provide fully customized advertising strategies for clients in every line of business.
The POWR Ratings rank IPG as the top stock in the Advertising sector. The stock is highlighted by a B Peer Grade in the POWR components. IPG is bouncing back from the coronavirus market dip yet it still about 7% below its average analyst price target. The high target for the stock is $22.
IPG is still $8 below its 52-week high of $25.20. All in all, IPG was chopped in half between February 19 and March 19, an unjustified share dumping that will prove to be quite the overreaction as time progresses. This digital marketing specialist is strategically positioned to weather the coronavirus storm and prevail with its core business intact, largely because it focuses on the digital realm as opposed to conventional outbound forms of advertising.
IPG’s impressive first-quarter results helped the stock increase by more than 11%. The company’s adjusted earnings were 22% better than expectations. Though net revenues are down on a year-over-year basis, this metric also exceeded analysts’ expectations.
Boston Omaha Corporation (BOMN)
If you are hesitant to invest in advertising due to concern regarding potentially underwhelming consumer spending, it might be best to invest in a company with diversified streams of revenue. BOMN is one such company.
BOMN’s business includes advertising, real estate and insurance. The POWR Ratings have BOMN ranked second of all stocks in the advertising sector. BOMN has an A Peer Grade yet its industry rank holds it back from a high overall POWR Rating.
BOMN reached its 52-week high of $25 around this time last year, dipped down to $13 during the coronavirus selloff and has since progressed quite nicely, moving toward the $20 mark.
If the economic reopening proves smooth, businesses will be more inclined to spend on advertising and BOMN will likely move upward in response. Scoop up BOMN today, monitor the economic indicators in the weeks ahead and act accordingly.
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TTD shares were trading at $303.63 per share on Thursday afternoon, up $9.40 (+3.19%). Year-to-date, TTD has gained 16.88%, versus a -4.31% rise in the benchmark S&P 500 index during the same period.
About the Author: Patrick Ryan
Patrick Ryan has more than a dozen years of investing experience with a focus on information technology, consumer and entertainment sectors. In addition to working for StockNews, Patrick has also written for Wealth Authority and Fallon Wealth Management. More...
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