Chicago, IL – November 28, 2022 – Today, Zacks Equity Research discusses Publicis Groupe S.A. PUBGY, Gambling.com Group Ltd. GAMB and Harte Hanks, Inc. HHS.
Link: https://www.zacks.com/commentary/2022161/3-stocks-to-buy-from-the-thriving-advertising-marketing-industry
The rise in manufacturing and service activities, along with increased digital marketing services and the success of the work-from-home trend, is enabling the Zacks Advertising and Marketing industry to counter the prevailing pandemic-related challenges.
Customer-centric approaches to business, digital strategies and technology investments are helping Publicis Groupe S.A., Gambling.com Group Ltd. and Harte Hanks, Inc. to sail through the current testing times.
The Zacks Advertising and Marketing industry comprises companies that offer an extensive range of services, including advertising, branding, content marketing, digital/direct marketing, digital transformation, financial/corporate business-to-business advertising, graphic arts/digital imaging, healthcare marketing and communications, and in-store design services. Prominent players from the industry include The Interpublic Group of Companies and Omnicom.
The pandemic will continue to change the way industry players have conducted business and delivered services so far. Currently, the industry's key focus is on channelizing money toward media formats and devices. To position themselves suitably in the post-pandemic era, service providers are increasing their efforts toward formulating strategic initiatives and identifying sources of demand.
Economic Recovery: The industry is a beneficiary of manufacturing and service activities. Economic activities in both manufacturing as well as service sectors are in the pink. Both the manufacturing PMI and the Services PMI measured by the Institute for Supply Management have stayed above the 50% mark for the past 29 consecutive months, indicating continued expansion.
Reviving Demand: The industry is mature, with demand for services remaining strong over time. Revenues, income and cash flows are anticipated to gradually reach pre-pandemic healthy levels, aiding most industry players in paying out stable dividends.
Digital Marketing Gathering Steam: Amid the pandemic, digital media consumption has shot up, with consumers spending more time on various media platforms and video-streaming services. Thus, agencies offering digital marketing services stand to gain, as these firms are better positioned to address the rapid change in customer preference. According to Magna's most recent forecast, ad dollars in the United States will reach $323 billion in 2022, crossing the $300-billion mark for the first time.
The Zacks Advertising and Marketing industry, housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #84. This rank places it in the top 33% of more than 250 Zacks industries.
The group's Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates solid near-term growth prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Before we present a few stocks that you may want to consider for your portfolio, let's take a look at the industry's recent stock market performance and current valuation:
Over the past year, the Zacks Advertising And Marketing industry, the S&P 500 composite and the broader sector witnessed a decline. The industry has declined 26.7% compared with the S&P 500 composite's decline of 15.9% and the broader sector's 40.2% decline.
On the basis of the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing advertising and marketing stocks, the industry is currently trading at 11.38 compared with the S&P 500's 17.33 and the sector's 24.57. Over the past five years, the industry has traded as high as 16.43X, as low as 7.44X, and at the median of 11.97X.
Here we present three stocks that are well positioned for near-term growth:
Gambling.com: This performance marketing company for the online gambling industry offers digital marketing services for iGaming and sports betting. The company has a strong operating model that is helping it to derive healthy margins and free cash inflow consistently. It has been improving its pricing power by increasing new depositing customers.
Gambling.com currently carries a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for 2022 bottom line has increased 38.9% in the past 60 days. Shares of the company have rallied 28.9% in the past six months. You can see the complete list of today's Zacks #1 Rankstocks here.
Publicis Groupe S.A.: The company is a provider of marketing, communications and digital business transformation services. It is currently witnessing strength across regions, especially the United States and Europe, driven by strong momentum in account wins.
Publicis also carries a Zacks Rank #1. The Zacks Consensus Estimate for the current-year EPS has gone up 10.3% in the past 60 days. Shares of the company have gained 20.2% in the past six months.
Harte Hanks: This company provides various multi-channel marketing services in the United States and internationally. Harte Hanks is currently benefiting from its asset-light business model that is helping it to attain operational improvements and generate cash. It continues to invest in sales, marketing, technology and partnerships for sustainable growth.
Harte Hanks carries a Zacks Rank #2 (Buy).The Zacks Consensus Estimate for 2022 EPS has remained unchanged in the past 60 days. Shares of the company have rallied 24.9% in the past six months.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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