10 Worst Advertising Stocks To Buy According to Short Sellers

7. Deluxe Corporation (NYSE:DLX)

Short Interest: 5.48%

Number of Hedge Fund Holders: 18

Deluxe Corporation (NYSE:DLX) is a data and payment company specializing in Data Solutions, B2B payments, Merchant Services, and Print. The Data Solutions segment provides data-driven marketing solutions, such as digital engagement, business incorporation services, financial institution profitability reporting, and account-switching tools. The Print segment encompasses business and personal checks, printed business forms, promotional products, and business accessories.

The company’s Merchant Services segment offers debit and credit card authorization and payment systems and processing services. Its customer base typically extends to small and medium-sized retail and service businesses. Furthermore, the B2B Payments segment provides treasury management solutions. These include remote deposit capture, remittance and lockbox processing, receivables management, paperless treasury management, fraud and security services, and the Deluxe Payment Exchange.

Deluxe Corporation  (NYSE:DLX) runs on strong fundamentals, with solid operating cash flows and expected sequential growth. These results reflect the company’s strong execution across North Star operating plan initiatives and core capital allocation priorities. Such efforts highlight the development of the company’s key profitability metrics and shed light on its ability to expand earnings consistently faster than revenue.

In the first half of 2024, the company recorded revenue growth rates of 13% and 8% year over year in its Data Solutions and Merchant Services segments, respectively. Like Q1 2024, it is making meaningful progress across all 12 North Star work streams. Around two-thirds of its growth initiatives are now in the execution phase, with benefit realization expected to be reflected in the second half of 2024 and throughout 2025.

A prominent indicator of the company’s North Star progress is the continuing decline in corporate segment expense as a percent of the total revenue. Deluxe Corporation  (NYSE:DLX) is also undertaking efforts to improve the marketing effectiveness of the workstream. It consolidated all of its six brands acquired as a part of the First American into Deluxe Merchant Services, one unified brand. This step is expected to improve the company’s marketing performance and efficiency. Moreover, the consolidation will simplify One Deluxe’s success in driving cross-selling.

Deluxe Corporation’s  (NYSE:DLX) growth and improvement initiatives lend it a strong competitive edge in the market. The stock is trading at a forward P/E of 6.29 at a 68.06% discount to its sector. Its current price target of $20.05 implies an upside of 49.63%. It ranks seventh on our list of the worst advertising stocks to buy, according to short sellers.