We recently published a list of the 12 Best Advertising Stocks to Buy Now. In this article, we are going to take a look at where National CineMedia, Inc. (NASDAQ:NCMI) stands against the other best advertising stocks to buy now.
Positive Momentum for the Advertising Market in 2025
Media companies are anticipating a stabilization in ad spending in 2025, along with potential growth for the platforms that offer live events and sports. CNBC reported the expectations for the advertising market in 2025 held by media executives, who opined that positive momentum is expected to continue emerging for media companies with tentpole live programming and sports rights. This improved outlook is supported by the end of the uncertainty that previously reigned supreme due to the election.
Although consumers are increasingly moving away from traditional TV bundles and more ad dollars are being spent on streaming, media executives believed that traditional TV is still significant in advertisement, especially when it comes to sports. Overall, a trend of stability is expected to emerge in the market, with executives hoping to go over and beyond the prior slowing in ad spending in recent years. CNBC reported that Mark Marshall, NBCUniversal’s chairman of global advertising and partnerships, was of the following opinion about the situation:
“Normalization is the right way to say it with the advertising market. With the election settled, a lot of companies feel the uncertainty over that has gone away.”
Dan Porter, CEO of sports media company Overtime, expressed similar sentiments:
“Our first quarter is looking really strong. I think that any election year is challenging for anyone in the fourth quarter because a lot of marketers end up sitting on their hands since the airwaves and digital are crowded. I think that’s true for us and it’s true for everyone.”
Sports and Live Programming: Important Avenues for Media Companies in 2025
Although ad revenue after the election is growing and the market forecast shows stability, Natalie Bastian, global chief marketing officer at Teads, opined that the sector is likely to see a lot of similar trends. She said 2024 had several significant moments for the industry that caused a surge in TV ad revenue, including the presidential election and the Summer Olympics. Bastian said the same budgets are anticipated to be carried over into 2025. CNBC reported that she said the following about the situation:
“What we’ve heard in general from some of our closest partners … media budgets aren’t growing, and so there’s just more selection into where [advertisers are] spending their money.”
These trends lend live programming and sports crucial significance for media companies. Advertisers and big audiences are increasingly attracted to sports, leading to media companies having to spend significant sums on game rights. According to EDO, an advertising data company, commercials played during live sports brought in 24% higher engagement than other programming forms. CNBC reported that Tim Hurd, vice president of media at Goodway Group, said the following to shed light on the situation:
“Live event coverage will continue to be a cornerstone of media engagement, and streaming services must step up their game. As more streaming platforms dive into sports, the challenge will be to keep viewers engaged, not just by offering content, but by enhancing the overall experience with personalized, non-disruptive ad units.”
Growth in the Advertising Industry
According to a recent report from GroupM, WPP’s media investment group, total revenue for the global advertising industry is anticipated to exceed $1 trillion for the first time in 2025, excluding US political advertising. It is expected to grow 7.7% in 2025 to reach $1.1 trillion. The primary driver of this growth is advertising on digital platforms, which entails retail media as a segment.
Despite the shift in consumer sentiments, TV is considered “the most effective form of advertising.” It is anticipated to grow around 2% in 2025, reaching $169.1 billion in total global ad revenue. In addition, “pure-play digital” ad revenue is expected to grow by 10% to $813.3 billion in 2025. Pure-play digital covers platforms such as TikTok and YouTube, but does not include “the digital extensions of traditional media.”
According to a report by Mordor Intelligence, the online advertising market is worth $285.96 billion as of 2025. It is anticipated to grow at a compound annual growth rate of 10.85% between 2025 and 2030, reaching $478.61 billion at the end of the forecast period. North America is the largest market in the industry and is also anticipated to be the fastest-growing.
Our Methodology
We sifted through stock screeners, financial media reports, and ETFs to compile a list of 20 advertising stocks. We then selected the top 12 with the highest number of hedge fund holders, as of Q4 2024, and ranked them in ascending order. We sourced the hedge fund sentiment data from Insider Monkey’s database.
Why are we interested in 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
The Lobby Entertainment Network digital displays showing dynamic and visually engaging advertisements.
National CineMedia, Inc. (NASDAQ:NCMI)
Number of Hedge Fund Holders: 20
National CineMedia, Inc. (NASDAQ:NCMI) is a media company that operates in the American cinema advertising sector. It has around 18,400 screens in more than 14,400 theaters nationwide in 190 Designated Market Areas. The company’s platform also manages other kinds of advertisements and promotions in theatre lobbies. These include digital online advertisements across several out-of-home venues, such as restaurants, convenience stores, and even college campuses.
National CineMedia, Inc.’s (NASDAQ:NCMI) core audience predominantly comprises Gen Z and Millenials, and its continual strength is a key growth driver for the company. These groups accounted for 69% of its total viewership in fiscal Q4 2024, cumulatively reaching over 43 million moviegoers. National CineMedia, Inc.’s (NASDAQ:NCMI) reach in this young, highly sought-after audience compares favorably to sports programming.
Fiscal Q4 2024 marked the fifth consecutive quarter of above-expectation results, reflecting the company’s strategic focus on advertising growth as the box office continues its momentum. It reported revenue of $86.3 million for fiscal Q4 2024, exceeding its revenue guide of $82 million to $86 million. The company also partnered with 84 unique advertisers in the quarter, with retail emerging as the top advertising category. National CineMedia, Inc. (NASDAQ:NCMI) ranks 10th on our list of the 12 best advertising stocks to buy now.
On March 19, Texas Capital initiated coverage of the company with a Buy rating and $7.50 price target. The firm says domestic box office revenues are “primed for a solid double-digit percent increase” in 2025 with continued post-pandemic recovery. Therefore, the exhibitors hold the potential to jump back to pre-pandemic adjusted EBITDA levels by 2026, even if the total industry attendance stays below pre-pandemic levels, the analyst told investors in a research note.
Riverwater Partners Sustainable Value Strategy stated the following regarding National CineMedia, Inc. (NASDAQ:NCMI) in its Q4 2024 investor letter:
“National CineMedia, Inc. (NASDAQ:NCMI) operates the largest in-theater advertising network in the U.S., partnering with major cinema chains to deliver pre-show advertising and marketing content. NCMI’s dominant market position and exclusive partnerships with leading cinema chains provide a competitive moat in the theater advertising space. The resurgence of box office attendance, driven by strong movie slates and a post-pandemic recovery, supports revenue growth over the next couple of years. It has a net-debt free balance sheet and sports a double digit free cash flow yield.”
Overall, NCMI ranks 10th on our list of the best advertising stocks to buy now. While we acknowledge the potential of NCMI as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NCMI but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
