In this article, we will take a look at the 5 best advertising agency stocks to buy. To see more such companies, go directly to 12 Best Advertising Agency Stocks to Buy.
5. Omnicom Group Inc. (NYSE:OMC)
Number of Hedge Fund Holders: 25
New York-based Omnicom Group Inc. (NYSE:OMC) is one of the market leaders in the advertising industry. Omnicom Group Inc. (NYSE:OMC) has various agencies and provides advertising solutions to sellers and buyers across the entire spectrum of the industry.
Despite headwinds in the ads market Omnicom Group Inc. (NYSE:OMC) recently posted strong Q1 results. Adjusted EPS in the period came in at $1.56, beating estimates by $0.16. Revenue in the quarter jumped 0.9% year over year to total $3.44 billion, beating estimates by $60 million.
As of the end of the fourth quarter of 2022, 25 hedge funds had stakes in Omnicom Group Inc. (NYSE:OMC). The most notable hedge fund stakeholder of the firm was Citadel Investment Group of Ken Griffin which owns a $162 million stake in Omnicom Group Inc. (NYSE:OMC).
4. Interpublic Group of Companies Inc. (NYSE:IPG)
Number of Hedge Fund Holders: 28
Interpublic Group of Companies Inc. (NYSE:IPG) is a major advertising and marketing company. Interpublic Group of Companies Inc. (NYSE:IPG) has gained about 7% over the past 12 months. In March the BofA analyst Adrien de Saint Hilaire gave a Buy rating for Interpublic Group of Companies Inc. (NYSE:IPG) after the analyst met the company’s management. Following the meeting, the analyst felt “confident” that the current headwinds faced by Interpublic Group of Companies Inc. (NYSE:IPG) were “transient” and the weakness in tech/telecom segments should be “more than offset” by strengths in healthcare segment.
A total of 28 hedge funds tracked by Insider Monkey had stakes in Interpublic Group of Companies Inc. (NYSE:IPG) as of the end of the fourth quarter of 2022. The biggest stakeholder of Interpublic Group of Companies Inc. (NYSE:IPG) was Natixis Global Asset Management’s Harris Associates which owns a $471 million stake in the company.
3. Accenture Plc (NYSE:ACN)
Number of Hedge Fund Holders: 63
Accenture Plc (NYSE:ACN) provides a variety of solutions in the advertising industry related to programmatic ads, using AI in ads, TV ads, multimedia ads and more.
As of the end of the fourth quarter of 2022, 63 hedge funds have stakes in Accenture Plc (NYSE:ACN). GuardCap Asset Management of Guardian Capital owns a $387 million stake in Accenture Plc (NYSE:ACN).
ClearBridge Sustainability Leaders Strategy made the following comment about Accenture plc (NYSE:ACN) in its Q4 2022 investor letter:
“Accenture plc (NYSE:ACN) is a leading global professional services company that helps clients build their digital infrastructure and optimize their operations. We view Accenture as a resilient, high-quality business with consistent earnings and cash flow, a strong balance sheet and very attractive returns on capital. Secular drivers like cloud migration and digital transformation, as well as new, innovative technology deployments like data security, block chain, AI and machine learning position Accenture well for continued growth. It is also currently rolling out a suite of sustainability tools that offers a comprehensive view of a company’s goals, progress and performance across financial and ESG measures, so it is an enabler of ESG for its clients. We exited our position in software-as-a-service company Workday to fund the position, largely on better relative risk/reward, in our view.”
2. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 152
The sheer size and scale of Alphabet Inc. (NASDAQ:GOOG)’s Google’s advertising operations makes the company one of the best advertising agency stocks to buy. Though Alphabet Inc. (NASDAQ:GOOG) isn’t an ads agency per se, literally hundreds of thousands of small and large ads agencies are working to help their clients get success on Google’s search engine platform. Alphabet Inc. (NASDAQ:GOOG) also offers various resources for people to fine-tune their ads and recommends various Google partner ads agencies.
According to data from Dentsu, companies spent approximately $400 billion on online ads last year. Alphabet Inc. (NASDAQ:GOOG) took away about a quarter of that spending.
Polen Focus Growth Strategy made the following comment about Alphabet Inc. (NASDAQ:GOOG) in its Q1 2023 investor letter:
“One area we are watching regarding Alphabet Inc. (NASDAQ:GOOG) and Adobe is AI systems and their capabilities, including generative AI. Interestingly, both Adobe and Alphabet could see benefits or threats from the emergence of generative AI and large language models (LLMs). Both companies already use generative AI to the benefit of their users in anticipating how content creators edit their work (Adobe) and in how search results are anticipated and generated (Google). At the same time, breakthrough technologies like AI can open the door to additional competition and/or impact a company’s profitability levels. We now see AI systems others are developing, including LLMs and generative AI offerings, that could be more competitive in the future. While we think it remains early days for ChatGPT and the capabilities of these types of LLMs and generative AI programs like DALL-E, the technology seems to be progressing at a fast rate and will at least require a strong response from incumbents.
As of now, we believe Alphabet and Adobe are leaders in their own right in these areas and have a clear path to improving their existing offerings with AI advancements, which would allow them to be net beneficiaries of AI. There are also significant barriers to building leading AI offerings in these areas. As a result, our position sizes in Adobe and Alphabet remain sizeable. For Adobe, the status of its pending $20 billion-plus Figma acquisition is also uncertain. There is a good chance, in our view, that it will be blocked by regulators, which would mean the future opportunity to expand its offerings to the developer community (beyond designers) may not occur.”
1. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 194
Meta Platforms, Inc. (NASDAQ:META) is the second biggest player in the online ads market and the company’s efforts to reignite growth are working as evident from its Q1 results. Meta Platforms, Inc. (NASDAQ:META)’s ad revenue in the first quarter of 2023 jumped about 4.1% on a YoY basis to reach $28.1 billion.
Meta Platforms, Inc. (NASDAQ:META) has a special Media and Creative Agency hub which provides resources to small businesses to find ways to promote and advertise their business on the Facebook platform. A total of 194 hedge funds tracked by Insider Monkey were long Meta Platforms, Inc. (NASDAQ:META) as of the end of the fourth quarter of 2022.
Giverny Capital made the following comment about Meta Platforms, Inc. (NASDAQ:META) in its Q1 2023 investor letter:
“Meta Platforms, Inc. (NASDAQ:META) was our leading performer, up 76% for the quarter. I have written quite a bit about Meta in prior letters and I feel like I got the basics right: Meta never had an earnings or engagement problem so much as an expense management problem. Once founder and CEO Mark Zuckerberg announced layoffs and a new commitment to efficiency, the stock doubled in a few months.”
You can also take a peek at 10 Most Profitable Small Businesses in 2023 and 10 Best April Dividend Stocks To Buy.
