7 Undervalued Online Services Stocks for Friday, March 22 (2024)

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.

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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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 Friday, March 22, 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.

Gravity Co., Ltd. is a developer, distributor and publisher of online games in Japan and Taiwan. The Company's segments include online games, mobile games and other. Its principal product includes Ragnarok Online, which is a multiplayer online role playing game. It categorizes products into over three categories, such as online games; mobile games and applications, and other games and game-related products and services, including character-based merchandise and animation. It offers over five online games, such as Ragnarok Online, Ragnarok Online II, Requiem, Dragonica (Dragon Saga) and R.O.S.E. Online, which are action adventure massively multiplayer online role-playing games (MMORPG). It develops mobile games, including Ragnarok Online-Uprising: Valkyrie, Ragnarok Online Mobile Story and Ragnarok Violet, and also publishes mobile games licensed from third parties. It provides games for game consoles and handheld game consoles, such as Nintendo DS, Xbox 360 and the PlayStation series.

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.

Gravity Co., LTD. (ADR) has a Value Score of 87, which is considered to be undervalued.

When you look at Gravity Co., LTD. (ADR)’s price-to-sales ratio at 0.90 compared to the industry median at 1.48, this company has a lower price relative to revenue compared to its peers. This could make Gravity Co., LTD. (ADR)’s stock more attractive for value investors.

Gravity Co., LTD. (ADR)’s price-earnings ratio is 4.72 compared to the industry median at 22.89. This means it has a lower share price relative to earnings compared to its peers. This could make Gravity Co., LTD. (ADR) more attractive for value investors.

Now, let’s assess Gravity Co., LTD. (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 2.5, when compared to the industry median of 13.3, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

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. Gravity Co., LTD. (ADR)’s shareholder yield is higher than its industry median ratio of

(1.46%). 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. Gravity Co., LTD. (ADR)’s price-to-book ratio is lower than its industry median ratio of 2.08. This could make Gravity Co., LTD. (ADR) more attractive to investors looking for a new addition to their portfolio.

iPower Inc. is a tech and data-driven online retailer and supplier of consumer home, garden and pet products, as well as a provider of ecommerce services for third-party products and brands. The Company offers thousands of stock keeping units from its in-house brands as well as from other brands through its ecommerce channel partners and its websites, www.zenhydro.com and www.simpledeluxe.com. It offers essential products in the hydroponic, gardening, home and pet goods categories. Its in-house branded products, marketed under the iPower and Simple Deluxe brands, include hydroponic-related items, fans, shelving, pet supplies and outdoor lifestyle products. The Company operates 121,000 square foot fulfillment centers in Los Angeles, California, and approximately 99,000 square foot fulfillment center in Rancho Cucamonga, California. It has a diverse customer base that includes both commercial businesses and individuals.

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.

iPower Inc has a Value Score of 89, which is considered to be undervalued.

iPower Inc’s price-to-book ratio is higher than its peers. This could make iPower Inc less attractive for value investors when compared to the industry median at 2.08.

You can read more about iPower 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.

MYT Netherlands Parent B.V., is a Germany-based holding company. The Company, through its subsidiary Mytheresa Group GmbH, operates as an electronic commerce platform for the global luxury fashion consumer, in addition to its flagship retail store and men’s location in Munich. The Company’s segments include online operations and retail store. The Company operates its businesses at the connection of luxury fashion, technology and service.

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.

MYT Netherlands Parent BV-ADR has a Value Score of 88, which is considered to be undervalued.

MYT Netherlands Parent BV-ADR’s price-to-book ratio is higher than its peers. This could make MYT Netherlands Parent BV-ADR less attractive for value investors when compared to the industry median at 2.08.

You can read more about MYT Netherlands Parent BV-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.

Paltalk, Inc. is engaged in providing communications software. The Company operates a network of consumer applications (apps) that creates a social media enterprise where users can meet, see, chat, broadcast and message in real time in a secure environment with others in its network. The Company?s product portfolio includes Paltalk, Camfrog and Tinychat, which together host a collection of video-based communities. Paltalk and Camfrog are both providers of live video social networking applications available on Windows, Mac OS, iOS, Android and other tablet devices. Tinychat enables adaptations of its video technology for use in alternative markets that are focused on a younger demographic user base. Its other products include ManyCam and Vumber. ManyCam is a live streaming software and a virtual camera that allows users to deliver professional live videos on streaming platforms, video conferencing apps and distance learning tools. Vumber is a telecommunications services 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.

Paltalk Inc has a Value Score of 74, which is considered to be undervalued.

Paltalk Inc’s price-to-book ratio is higher than its peers. This could make Paltalk Inc less attractive for value investors when compared to the industry median at 2.08.

You can read more about Paltalk 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.

SO-YOUNG INTERNATIONAL INC. is a China-based holding company mainly engaged in online destination for discovering, evaluating and reserving medical aesthetic services. The Company operates through two segments: Information Services segment and Reservation Services segment.

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.

So-Young International Inc - ADR has a Value Score of 93, which is considered to be undervalued.

So-Young International Inc - ADR’s price-earnings ratio is 22.6 compared to the industry median at 22.9. This means that it has a lower price relative to its earnings compared to its peers. This makes So-Young International Inc - ADR more attractive for value investors.

So-Young International Inc - ADR’s price-to-book ratio is higher than its peers. This could make So-Young International Inc - ADR less attractive for value investors when compared to the industry median at 2.08.

You can read more about So-Young International 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.

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'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 87, which is considered to be undervalued.

Weibo Corp (ADR)’s price-earnings ratio is 6.4 compared to the industry median at 22.9. 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 2.08.

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.

Zhihu Inc is a China-based holding company principally engaged in the operation of online question-and-answer (Q&A;) communities. The Company is principally engaged in the provision of advertising services, paid membership services, content monetization solutions and other services. The Company's online community provides a platform for users to find solutions, make decisions, find inspiration and have fun. The Company's online community is an online content community based on user-generated content (UGC). In addition, the Company's platform offers a range of contents such as daily life choices, esoteric knowledge content or unique experiences, and important life choices.

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.

Zhihu Inc - ADR has a Value Score of 93, which is considered to be undervalued.

Zhihu Inc - ADR’s price-to-book ratio is higher than its peers. This could make Zhihu Inc - ADR less attractive for value investors when compared to the industry median at 2.08.

You can read more about Zhihu 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.

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.

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.