We recently published a list of 10 Stocks That Will Go to the Moon According to Reddit. In this article, we are going to take a look at where Gartner, Inc. (NYSE:IT) stands against the other stocks.
FINRA Investor Education Foundation and CFA Institute (2023) revealed that ~37% of Gen-Z investors in the US and ~38% in the UK come to social media influencers regarding investment decisions. Therefore, it is important to explore the role finfluencers (influencers sharing financial advice on social media) play in providing investment information and how Gen-Z investors engage with finfluencers. Young investors are considering memes and viral videos as the primary source of investment advice.
Social Media and Investments: Do They Complement Each Other?
Experts believe that retail or non-professional investors are now becoming dependent on digital channels, like social media platforms such as TikTok, when it comes to investing.
FINRA revealed that ~60% of US investors under age 35 believe that social media can be used as a source of investment information. This compares to ~57% who use finance professionals. This increase is probably because digital channels are becoming easily accessible, with ~60% of the global population utilizing social media (as per DataReportal).
Quick-scroll websites are now considered the go-to spot for investment ideas and inspiration. This is because of their bite-sized format and easy access. Ofcom, which tracks news consumption in the UK – revealed that TikTok’s reach for news went up from ~1% in 2020 to ~7% in 2022. This was mainly seen in younger folks aged between 16 – 24 years. Pew Research mentioned that, in the US, this increased from ~3% in 2020 to ~10% in 2022.
Financial advice content, which is shared on social media, has been contributing to the growth of the “creator economy,” which is pegged at ~$127 billion globally (as per Coherent Market Insights). This is expected to reach US$528.39 billion by 2030, with growth stemming from higher demand for user-generated content and increased monetization opportunities. Financial institutions and investment advisory companies are now focusing on creating pathways from social media to their product and services to exploit strong market opportunities. Therefore, most retail investors continue to make investing decisions under social media’s influence.
Retail Traders Making a Significant Portion in The US Stock Options
JPMorgan Chase & Co. highlighted that non-professional investors are now making a bigger part of the US options market as they continue to pour money mainly into short-term bets and technology stocks. The bank highlighted that retail traders accounted for ~18.3% of the total options activity in June. Social media and online investing communities have influenced retail investors to the extent that these investors don’t shy away from making investments in the downturn.
In late July and early August 2024, when there was a sharp decline in popular technology shares, retail investors turned out to be net buyers.
Vanda Research mentioned that individual investors, who were caught up in the market downturn, continued to be net buyers of shares of leading technology and AI-related companies. Just to balance out the risks, retail investors directed significant buying to an ETF tracking 20-Y Treasury bonds. Wall Street experts and enthusiasts believe that this confidence comes from the online investing communities and social media platforms, where there were discussions about going long on leading technology shares as they were trading at “decent levels.”
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Technicians analyzing research data and benchmarks displayed on multiple screens.
Gartner, Inc. (NYSE:IT)
Number of hedge fund holders: 35
Gartner, Inc. (NYSE:IT) delivers actionable and objective insight to executives and their teams. It carries out operations via 3 business segments, namely Research, Conferences and Consulting.
Over the medium term, the company’s revenue and earnings growth is expected to be supported by its large global footprint and established customer base. Gartner, Inc. (NYSE:IT) can distribute intellectual property and expertise throughout various platforms and business segments to achieve incremental revenue and profitability.
Gartner, Inc. (NYSE:IT)’s core subscription research businesses are expected to see strong growth in upcoming quarters. For companies evaluating the opportunities and risks of Al on their businesses, Gartner, Inc. (NYSE:IT) is expected to act as a decision support resource. This should help the company achieve volume growth and pricing realization. As a result of revenue growth and focus on cost control, the company should see margin expansion and enhanced FCF generation.
Gartner, Inc. (NYSE:IT) has updated its full-year guidance, with research revenue expected to touch at least $5.105 billion and total FCF expected to be at least $1.08 billion. The company’s research revenues increased by $58.1 million on a YoY basis during 2Q 2024 primarily because of research contract value growth. Also, its EBITDA for 2Q 2024 touched $416 million, reflecting an 8% increase YoY. The company repurchased $340 million of its stock and it now has more than $1 billion in repurchase capacity remaining.
In the second quarter, 35 hedge funds held stakes in Gartner, Inc. (NYSE:IT) totalling $1.11 billion. Analysts at UBS Group initiated the coverage on the shares of Gartner, Inc. (NYSE:IT), and raised their price objective from $510.00 to $580.00. They gave a “Buy” rating on 31st July. Baron Funds, an investment management company, released its first quarter 2024 investor letter. Here is what the fund said about Gartner, Inc. (NYSE:IT):
“Shares of Gartner, Inc. (NYSE:IT), the leading provider of syndicated research to the IT sector, contributed to performance. Fourth quarter financial results were mixed, with declines in net income and EPS. However, solid increases in contract value and strong full-year performance, including a 9% increase in net income and an 11% rise in diluted EPS, helped boost the company’s share price. In addition, a 19% increase in free cash flow for the quarter and 6% for the full year underscored Gartner’s operational efficiency. Gartner’s core subscription research businesses compounded at attractive rates, and we believe growth is poised to accelerate. We think Gartner will emerge as a key decision support resource for every company evaluating the opportunities and risks of AI on its business, providing a tailwind to volume growth and pricing realization. We expect Gartner’s sustained revenue growth and focus on cost control to drive continued margin expansion and enhanced free-cash-flow generation. The company’s balance sheet is in excellent shape and can support aggressive repurchases and bolt-on acquisitions, in our view.”
Overall IT ranks 5th on our list of stocks that will go to the moon. While we acknowledge the potential of IT as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than IT but 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. This article is originally published at Insider Monkey.
