|
|
 |
Up with Ads! Two Top Advertising Stocks for Investors By David Penn
January 28, 2008 1:00 PM ET
|
When businesses sense an economic expansion and gear up to spend, one of the first places their money goes is to advertising. And for investors looking for stocks likely to be higher in a year's time, our PowerRatings have uncovered a pair of advertising stocks that might be good places for investors to spend money, as well. What makes these two stocks compelling is not just their own high PowerRating--reason enough to garner interest in a stock. But these two companies also come from an industry--Advertising Services--that has the highest PowerRating possible for an industry group: 10. 10-rated industries are among the best places for investors to look for stocks. Our research into industry group behavior going back to
1995 revealed that industries with PowerRatings of 10 greatly outperformed the average industry on an average, annualized basis.
While the average industry since 1995 has produced average annualized returns of approximately 14.61%, industries with PowerRatings of 10 have returned an average annualized 35.27%. That is more than double the performance of the average industry group. The Advertising Services industry group includes six stocks. Two of those stocks are stocks that investors should avoid--even in this 10-rated industry. Those stocks are Focus Media Holding Ltd. (FMCN | news | PowerRating | PR Charts ), with its PowerRating of 3 and Valueclick (VCLK | news | PowerRating | PR Charts ) with its PowerRating of 2.
Both of these stocks are less likely than the average stock to be higher one year later based on these low, "in the red" PowerRatings. Even if these low PowerRating stocks are higher in a year's time, their low PowerRatings mean that they are likely to underperform the average stock over that time. Another two stocks in this industry group--Monster Worldwide (MNST | news | PowerRating | PR Charts ) and WPP Group Plc (WPPGY | news | PowerRating | PR Charts )--are expected to perform about as well as the average stock. WPP Group Plc, with its PowerRating of 7, will probably do a little better than the average stock. Monster Worldwide, with its PowerRating of 4, will probably do a little worse than the average stock. But while both stocks represent better opportunities for investors than either Focus Media or Valueclick, neither represent the best of what investors can look forward to when it comes to the advertising services industry group. For that, investors are better off turning to the top two stocks of the group: The Interpublic Group of Companies (IPG | news | PowerRating | PR Charts ) and Omnicon Group (OMC | news | PowerRating | PR Charts ). Both of these stocks are not only the best opportuntities for investors right now among companies in this industry, but also have the sort of high PowerRatings that investors can count on to be more reliable and a better performer than the average stock.
The Interpublic Group of Companies (IPG | news | PowerRating | PR Charts ) consists of a number of smaller companies--from McCann to Lowe to Jack Morton to R/GA--all involved in advertising, marketing and communications for corporate clients around the world. These companies and their businesses range from general advertising services to special events promotion to sports marketing. The Interpublic Group is currently trading trading in the lower half of its 52-week price range from $13.69 to $7.22.
Omnicon Group (OMC | news | PowerRating | PR Charts ) is a major advertising services holding company that does business in a variety of fields from global and national advertising, to public relations, specialty communications and marketing, as well as customer relationship management (CRM). The company beat analyst expectations for the third quarter, but the stock has suffered somewhat in the wake of Omnicon Group's caution with regard to the fourth quarter. Omnicon Group has a P/E of 15.60, and is trading in the lower half of its 52-week price range from $55.45 to $40.86
|
|
