1. Advantage Solutions Inc. (NASDAQ:ADV)
Share Price: $3.06
Forward P/E Ratio: 7.93
Earnings Growth This Year: 147.40%
Number of Hedge Fund Holders: 23
Advantage Solutions Inc. (NASDAQ:ADV) is a marketing company that helps brands and retailers sell their products more effectively. It provides three main services including outsourced sales, where it manages sales for other companies, marketing solutions, which provide in-store and online marketing services, and lastly, experimental services where the company organizes events to allow customers to try products before buying.
The description above seems very basic for a marketing company. However, there is more, what sets Advantage Solutions Inc. (NASDAQ:ADV) apart is its data and technology solutions, it uses digital platforms such as Advantage CSP, which allows brands to manage their digital content and experiences effectively.
The company just completed its business simplification process, which was aimed at simplifying its portfolio to align better with business needs. As a result of the process, it was able to generate around $280 million from divestiture proceeds, which includes $130 million from the Jun Group sale. Moreover, the company is halfway through its unified organization transformation, which will have interconnected capabilities to serve brands better.
The overall revenue for the second quarter was down year-over-year due to the ongoing strategic measures and softness in branded products. Revenue for the quarter came in at $873 million 9% decrease year-over-year. On the bright side, its Experimental Services business proved to be a successful venture during the quarter its revenue improved by 12% year-over-year.
Management believes that the second half of the year is naturally favored by seasonality factors and the recent strategic measures are expected to position the company to benefit more from seasonality. Therefore if you are looking for cheap penny stocks to buy now, you might want to consider Advantage Solutions Inc. (NASDAQ:ADV).
Curreen Capital made the following comment about Advantage Solutions Inc. (NASDAQ:ADV) in its Q3 2023 investor letter:
“Advantage Solutions Inc. (NASDAQ:ADV) works with brands and stores to sell products through stores. The company is one of the largest managers of in-store sampling programs in the U.S. (for example, would you like to try this new brand of: cheese/chips/dip/etc.) Advantage Solutions was a SPAC-merger completed in October 2020. Advantage Solutions is a capital light business that earns high returns on capital. It has a meaningful debt load, though the debt lacks onerous covenants and does not come due for several years. Advantage Solutions uses its free cash flow to repay debt and acquire smaller competitors. The company currently trades at an attractive upside-to-downside ratio.”
While we acknowledge the potential of Advantage Solutions Inc. (NASDAQ:ADV) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for a promising AI stock that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure. None. Insider Monkey focuses on uncovering the best investment ideas of hedge funds and investors. Please subscribe to our daily free newsletter to get the latest investment ideas from hedge funds’ investor letters by entering your email address below.
