In 2024, the digital advertising market is valued at close to $670 billion. It accounts for approximately 69% of total media ad expenditure – an impressive 10.9% increase from the previous year. This upward trend is expected to continue, with projections suggesting the market will reach $870 billion by 2027. The rise of mobile and data-driven advertising, along with innovations like generative artificial intelligence (AI), is driving this expansion.
Given this growth potential, here are the top three digital advertising stocks for your July buy list.
Integral Ad Science (IAS)
Integral Ad Science (NASDAQ:IAS) focuses on digital ad verification and optimization. Its cloud-based platform, IAS Signal, ensures ads reach real audiences in safe environments with insights and independent measurement across various formats.
For the first quarter of 2024, IAS reported $114.53 million in revenue, a 7.9% increase from the previous year. Management highlighted a 40% rise in social media revenue and new industry-first partnerships. Despite this growth, the company posted a net loss of $1.3 million, or 1 cent per share, reversing from a prior-year profit of 2 cents per share.
Looking ahead, Integral Ad Science anticipates strong demand for AI-driven solutions in the latter half of 2024. The company recently introduced deepfake measurement capabilities. It also expanded collaborations with industry giants such as Microsoft (NASDAQ:MSFT), Pinterest (NYSE:PINS), Reddit (NYSE:RDDT), and Amazon (NASDAQ:AMZN). Its partnership with Microsoft includes improved campaign measurement, brand safety, and invalid traffic verification across ad platforms.
Despite these developments, IAS stock declined over 28% so far this year. The shares are trading at 58 times forward earnings and 3.4 times sales. Meanwhile, analysts’ 12-month median price forecast for IAS stock stands at $16, presenting an upside potential of 52% from current levels.
Invesco Next Gen Media and Gaming ETF (GGME)
Invesco Next Gen Media and Gaming ETF (NYSEARCA:GGME) deserves a spot on today’s list of digital advertising stocks. This exchange-traded fund gives access to companies at the forefront of media and gaming innovation, including those heavily involved in digital advertising. Its diversified investment approach helps mitigate risks while capturing sector growth.
GGME was launched in June 2007 and currently holds 89 stocks. The fund’s portfolio is top-heavy. The top 10 largest holdings comprise 60% of its $37.5 million net assets. Several of the leading names include Apple (NASDAQ:AAPL), Netflix (NASDAQ:NFLX), Nvidia (NASDAQ:NVDA) and Qualcomm (NASDAQ:QCOM). The fund’s sector allocation is predominantly large-cap growth stocks (42%), followed by large-cap blend stocks (30%), providing a blend of stability and high growth potential.
So far in 2024, GGME has delivered a 21% return. The fund’s expense ratio is 0.6% or $60 annually per $10,000 invested, which is competitive for a specialized fund. Currently trading at 17.1x trailing earnings and 2.1x book value, GGME stands out as a strong investment in the digital advertising space.
Taboola.com (TBLA)
Taboola.com (NASDAQ:TBLA) is a rising force in the sector. Leveraging its AI-powered platform, Taboola drives content recommendations across the web, helping websites and apps connect with targeted audiences.
In its first-quarter report, Taboola posted $414 million in revenue, marking an increase of 26% from a year ago. The net loss was $26.2 million, or 8 cents per diluted share, an improvement from a loss of 9 cents per share last year. The company repurchased $28 million in shares during the quarter, with $92 million remaining under a buyback authorization, set to continue through 2024.
Taboola recently launched Taboola Select, a premium editorial partnership for large advertisers. It also secured exclusive deals with major partners like Foundry and a360media. Furthermore, Taboola has been selected by Apple to sell ads on Apple News and Apple Stocks apps. This global ad management role will enhance the company’s market presence and revenue potential.
However, TBLA stock has dropped over 22% so far this year. As a result, the shares are trading at attractive valuations of 11x forward earnings and 0.8x sales. Finally, analysts are bullish, projecting a 12-month median price target of $6, implying a potential 75% upside. As Taboola prepares its earnings report on Aug. 7, its growth prospects offer an enticing risk/reward opportunity.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor held a LONG position in AAPL, NVDA and AMZN.
Tezcan Gecgil, PhD, began contributing to InvestorPlace in 2018. She brings over 20 years of experience in the U.S. and U.K. and has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Publicly, she has contributed to investing.com and the U.K. website of The Motley Fool.