We recently compiled a list of the 10 Best Middle East and Africa Stocks To Buy According to Analysts. In this article, we are going to take a look at where Taboola.com (NASDAQ:TBLA) stands against the other Middle East and Africa stocks.
MENA’s Economic Outlook for 2024 and the Rising Interest in Private Equity and Venture Capital Investments
According to the Middle East and North Africa Economic Update report published by the IMF in April 2024, the Middle East and North Africa (MENA) region will experience modest growth of 2.7% in 2024, up from 1.9% in 2023. Both oil importers and exporters in the region are expected to grow at similar rates in 2024. The forecasted growth difference between the Gulf Cooperation Council (GCC) economies and developing oil importers (excluding Egypt) is nearly 1%. GDP per capita is expected to rise by just 1.3% in 2024, driven almost entirely by the GCC economies. The impact of ongoing conflicts has ceased economic activity, particularly in Palestine. In Gaza, economic activity has nearly dropped by 86% in the fourth quarter of 2023 compared to the same quarter in 2022. The Palestinian economy’s outlook remains highly uncertain, heavily dependent on the conflict’s progression. The disruptions in maritime transportation, particularly through the Suez Canal, affected both regional and global trade.
Over the past decade, most MENA economies have seen increases in their debt-to-GDP ratios as MENA oil importers struggle to reduce their debt-to-GDP ratios due to high oil prices. Additionally, oil importers have been unable to lower their debt-to-GDP ratios through inflation, mainly due to exchange rate fluctuations and off-budget factors, known as stock-flow adjustments, highlighting the need for greater debt transparency. On the other hand, for MENA oil exporters, periods of high GDP growth are typically associated with smaller increases in nominal debt stocks, leading to a slower rise or even a decrease in the debt-to-GDP ratio.
However, interest in private equity (PE) and venture capital (VC) has been surging in the Middle East and Africa, reflecting a notable shift in investment preferences within the region. According to recent data, provided by Preqin, in collaboration with the Dubai International Financial Centre (DIFC), approximately 65% of investors in the region are either planning to maintain or increase their exposure to private equity this year. Similarly, 56% of investors are keen to do the same with their venture capital investments. This growing interest is partly due to the region’s historical under-investment combined with an optimistic outlook on the regional economic and market conditions.
Despite challenges due to geopolitical tensions, venture capital remains a critical component of the investment ecosystem. The sector is expected to recover as it adapts to the current economic conditions. In the Middle East, investor sentiment towards VC and PE is generally positive. A significant portion of regional investors have reported that their PE and VC investments have met or exceeded expectations. Sectors such as fintech, technology, healthcare, and infrastructure are particularly attractive to investors.
The Middle East and North Africa region is poised for a modest economic recovery in 2024, however, geopolitical tensions and conflicts continue to pose significant challenges. As MENA economies navigate through fluctuating global conditions and regional disruptions, the interest of private equity and venture capital investors reveals the region’s promising outlook for investors and economic stakeholders.
Our Methodology
For this article, we used Finviz and Yahoo Finance stock screeners plus online rankings to compile an initial list of the 40 largest companies in the Middle East and Africa by market cap. From that list, we narrowed our choices to the 10 stocks that analysts see the most upside to. The list is sorted in ascending order of analysts’ average upside potential, as of August 23. We also included the market cap of the companies as of August 23. The list is sorted in ascending order of their average upside potential as of August 23.
Why do we care about what hedge funds do? 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).
A close up of a mobile device displaying a customized AI-based algorithm interface.
Taboola.com (NASDAQ:TBLA)
Upside Potential: 57.37%
Market Cap: $1.17 Billion
Taboola.com (NASDAQ:TBLA) was founded in Israel and is a global leader in content discovery and native advertising. The company’s platform connects advertisers with a vast audience through personalized content recommendations on top publisher websites. Taboola.com (NASDAQ:TBLA) has 600 million daily active users and strategic long-term contracts with tech giants such as Apple and Yahoo.
Taboola.com (NASDAQ:TBLA) operates an AI-driven recommendation engine that powers personalized content recommendations across the open web, outside major platforms like Meta and Google. This model has proven successful in driving user engagement and monetization, making Taboola.com (NASDAQ:TBLA) a critical player in the digital advertising sector. The company’s revenue is primarily derived from advertisers who pay for user engagement, such as clicks or conversions, on ads placed through Taboola.com’s (NASDAQ:TBLA) platform.
On July 16, Taboola.com (NASDAQ:TBLA) entered an exclusive agreement with Apple, to integrate native advertising into Apple News and Apple Stocks apps. This agreement has strengthened Taboola.com’s (NASDAQ:TBLA) standing in the digital advertising space and has positioned the company as an authorized advertising reseller for Apple. Native advertising, which involves creating ads that seamlessly blend with the content on the platform, will now be featured within the feeds and articles of select publishers on these Apple apps.
Earlier in 2023, Taboola.com (NASDAQ:TBLA) scored a 30-year agreement with Yahoo, which helped the company to access Yahoo’s vast digital properties, which collectively attract nearly 900 million monthly active users across various platforms, including Yahoo Mail, Sports, Finance, and News. This deal allows Taboola.com (NASDAQ:TBLA) to leverage its extensive network of over 9,000 publisher partners and 500 million active users daily to offer brands unparalleled scale in reaching consumers within Yahoo’s trusted editorial environments.
The 30-year partnership with Yahoo could support Taboola.com (NASDAQ:TBLA) to generate over $1 billion in annual revenue. The company’s expansion into premium digital assets through Taboola Select, including platforms like Apple News and Microsoft properties, further strengthens its market position. These partnerships not only diversify Taboola’s revenue streams but also enhance its ability to attract high-profile advertisers looking to reach premium audiences. Despite its strong business model and strategic partnerships, Taboola.com’s (NASDAQ:TBLA) stock is currently undervalued, trading 10.40 times its earnings, which is a 22% discount compared to the sector median of 13.37.
In the year 2023, Taboola.com (TBLA) generated a revenue of $1.43 billion up 13% from the previous year, and EBITDA stood at $98.7 million. The company’s forecast for 2024 includes revenue growth of 33%, with an expected Adjusted EBITDA of over $200 million. This outlook suggests a significant upside potential, especially as the company integrates its new partnerships and expands its reach. In the second quarter,Taboola.com’s (TBLA) stock was held by 31 hedge funds with stakes worth $41.29 million. Lakewood Capital Management is the largest shareholder in the company with a stake worth $4.9 million as of June 30. Industry analysts have a consensus on the stock’s Buy rating, setting an average share price target at $5.50, which represents a 57.37% upside potential from its current level.
Overall TBLA ranks 4th on our list of the best Middle East and Africa stocks to buy according to analysts. While we acknowledge the potential of TBLA 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 timeframe. If you are looking for an AI stock that is more promising than TBLA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.