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Philip van Doorn

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Sept. 19, 2022, 6:12 a.m. EDT

It’s a great time to scoop up bargain stocks. Here are 21 examples that could make you a lot of money.

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By Philip van Doorn

Are you a contrarian investor? Sometimes it seems everyone claims to be one, but it isn’t easy, especially after a wipeout such as the one we saw on Sept. 13.

An investor who wishes to pay bargain prices to enjoy larger gains down the line needs the courage to jump in when other people are in panic mode.

Below is a list of companies in, or associated with, an industry that has taken it on the chin this year: online advertising.

Most of the companies in this group are expected to grow their revenues at a much faster pace than the broader market over the next two years.

Back to basics with Warren Buffett

Before looking at the online advertisers, it is a good idea to review the following, even if you believe you have heard it all before.

You have probably seen bits and pieces of the following from Berkshire Hathaway CEO Warren Buffett from his letter to shareholders summing up the conglomerate’s results in 1986. Here’s a longer version of it:

Common stocks, of course, are the most fun. When conditions are right, that is, when companies with good economics and good management sell well below intrinsic business value — stocks sometimes provide grand-slam home runs.

Buffett then writes that Berkshire cannot predict stock-market performance.

What we do know, however, is that occasional outbreaks of those two super-contagious diseases, fear and greed, will forever occur in the investment community. The timing of these epidemics will be unpredictable. And the market aberrations produced by them will be equally unpredictable, both as to duration and degree. Therefore, we never try to anticipate the arrival or departure of either disease. Our goal is more modest: We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.

I bolded that last sentence. It is easy to suggest that people looking to bag outsized gains go against the grain when the market gives them the opportunity. It is far more difficult to have enough faith and patience to put the idea into practice.

As part of your own investment research, you should read Buffett’s most recent letter to shareholders. All of his letters can help you. They are listed here .

The beaten-down online-advertising group

This idea resulted from a Twitter posting by Eric Jhonsa:

Jhonsa mentioned the semiconductor industry, whose stocks have been slammed this year as chip makers enter a downcycle, in the wake of pandemic-era shortages. Several of the largest manufacturers in the industry have had large recent cuts to their 12-month rolling consensus estimates for sales and earnings. Others have bucked the trend .

Jhonsa supplied a list of 21 stocks of online advertisers or companies that provide supporting software or services. These stocks have been hammered this year. For some, forward price-to-earnings ratios are now relatively low when considering how rapidly these companies are expected to grow. Analysts expect great things for the three stocks Jhonsa mentioned by ticker, as you can see below.

To look further ahead, here’s Jhonsa’s list, with consensus sales estimates for calendar 2022, 2023 and 2024 among analysts polled by FactSet. The 2024 sales estimates are available for all but two companies. The group is ranked by how much sales are expected to grow during 2023, based on the estimates:

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