In the fast-paced world of technology, only the agile survive. Today, we’re diving deep into three digital giants—AOL, Google, and Yahoo—who have not just survived but thrived by metamorphosing into comprehensive entertainment ecosystems. Once simple service providers, they now offer an array of services encompassing entertainment, news, gaming, social networking, email, and more. These companies exemplify adaptability and innovation—traits that have led to impressive sales and earnings growth. Let’s explore why these internet titans should be at the top of your investment watchlist.
Editor's Note: Analysis and insight for this article were originally sourced from our friends at InvestorPlace
AOL: Diversified and Dominating the Mobile Entertainment Space
When you think of AOL (AOL), your mind might drift back to the early days of the internet. But this isn’t your grandmother’s AOL anymore. Since its split from Time Warner, AOL has transformed into a mobile entertainment conglomerate. Gone are the days of dial-up—the company has embraced the future with a diverse range of services aimed at keeping users within its constantly expanding ecosystem.
Beyond Just Entertainment
AOL offers an assortment of services from news and entertainment to gaming, ensuring that users have little reason to stray from its platform. The website today offers a wide range of offerings designed to keep users in the AOL network. This focused diversification strategy has fueled its consistent outperformance of analyst expectations. Recently, analysts have been scrambling to raise their estimates for the rest of 2013 and 2014.
A Solid Grade
According to Portfolio Grader, AOL maintains a commendable “B” grade, reflecting its robust performance and investor appeal. AOL’s stock has been classified as a buy or strong buy in Portfolio Grader for the past year and continues to exhibit strong fundamentals. Those looking for a stable yet potentially high-performing stock in the tech sector would do well to consider AOL. The company’s ongoing evolution and innovation promise to yield significant rewards for shareholders.
Analyst Ratings and Forecasts (Historical as of 2015):
| Consensus Rating | Average Price Target | Potential Gain | Number of Ratings |
|---|---|---|---|
| Hold | $43.50 | 10.3% | 22 |
Summary of Analysts’ Outlook (as of 2015):
Analysts had a mixed outlook on AOL, with some viewing the company’s efforts to transform its business model as positive, while others were concerned about the company’s ability to compete in the rapidly changing digital landscape.
Google: Dominating Multiple Markets including YouTube and Android
Google (GOOG) started as a search engine, but limiting it to that description doesn’t do justice to its transformational journey. Today, Google is a multifaceted internet and mobile information and entertainment complex. The company’s suite of services—from its dominant search engine to its ventures into mobile with Android—showcases its expansive influence.
A Juggernaut of Services
Google’s offerings include a diverse array of products such as YouTube, Chrome, and an extensive ad network. Each of these platforms drives user engagement and revenue in unique ways. Google Chrome has become the go-to browser for millions, while YouTube continues to be a content consumption behemoth. On the mobile side, Google’s Android operating system competes robustly with Apple’s iPhone, maintaining a strong and growing user base.
Unequaled Growth
This diversity in products and services translates to solid revenue and profit growth. By continuously expanding its ecosystem, Google has positioned itself as a safe and lucrative investment in the tech sector. Portfolio Grader highlights Google as a strong buy, underpinned by its secure and growth-oriented business model. The company’s transformation into a full-fledged mobile and internet information and entertainment complex has given it solid revenue and profit growth, ensuring it remains a strong buy in Portfolio Grader.
Analyst Ratings and Forecasts:
| Metric | Value |
|---|---|
| Consensus Rating | Overweight (Buy) |
| Average Price Target | $3,344.44 |
| Potential Gain | 14.1% |
| Number of Ratings | 44 |
Summary of Analysts’ Outlook:
Analysts have a bullish outlook on GOOG, with a consensus rating of Overweight (Buy). The average price target of $3,344.44 suggests a potential gain of 14.1% from the current price. The majority of analysts believe that Google’s strong brand, dominant position in search and online advertising, and growing presence in cloud computing and artificial intelligence will drive future growth.
Yahoo: Strategic Acquisitions are Paying Off Big
Yahoo (YHOO) is a name that invokes plenty of nostalgia, but it’s anything but relic in the modern digital landscape. Over the last few years, Yahoo has reinvented itself through strategic acquisitions and by diversifying its service offerings. This rejuvenation has transformed Yahoo into an entertainment and news powerhouse, making it a compelling choice for investors eyeing dynamic growth.
Strategic Acquisitions and Services
One of the cornerstones of Yahoo’s transformation was its acquisition of blogging platform Tumblr, adding over 100 million users to its portfolio. Yahoo has also leaned heavily into popular services like its highly trafficked sports coverage, fantasy sports, and financial news. Each of these segments has driven higher user engagement and revenue growth.
Earnings Surprises
Yahoo’s resurgence is highlighted by four consecutive huge positive earnings surprises. Such surprises have not gone unnoticed, earning Yahoo the highest rating of “A” in Portfolio Grader. This robust performance implies that Yahoo is not just bouncing back—it’s surging ahead as a leading contender in the internet and entertainment sectors. Analysts did not expect much from Yahoo in the past year, and the company has continually posted remarkable earnings.
Analyst Ratings and Forecasts:
| Metric | Value |
|---|---|
| Consensus Rating | Hold (2.8/5) |
| Average Price Target | $43.14 |
| Potential Gain | 10.3% |
| Number of Ratings | 24 |
Summary of Analysts’ Outlook:
Analysts have a neutral outlook on Yahoo Inc., with a consensus rating of Hold. The average price target of $43.14 suggests a potential gain of 10.3% from the current price. While some analysts see value in Yahoo’s core business and its stake in Alibaba Group, others are concerned about the company’s struggles to grow its revenue and the impact of the Verizon sale.
The Strategic Edge
What makes AOL, Google, and Yahoo stand out is their ability to strategically extend their services, transforming into powerful entertainment conglomerates. Each company has uniquely positioned itself to capture and retain user engagement in innovative ways.
AOL’s Continuity and Resilience
AOL, post its Time Warner era, has diversified convincingly into various entertainment segments. The company’s resilience against analyst expectations—often outperforming them—makes it a standout option for investors.
Google’s Diverse Dominance
Google’s portfolio isn’t just vast; it’s strategically cohesive. From the ever-popular Android to YouTube’s content machine, Google maintains a dominant presence in both internet and mobile ecosystems, equipping it with unparalleled growth opportunities.
Yahoo’s Market Rejuvenation
Yahoo’s strategic acquisitions and popularity in sports and finance have not only brought it back into relevance but have also made it a strong investment option. Its continued market performance—reflected in its earnings—underscores its rejuvenated presence.
Invest in Evolution
AOL, Google, and Yahoo exemplify the power of transformation and innovation in the tech industry. Their evolution into comprehensive entertainment hubs has led to strong growth fundamentals and market adaptability. These internet titans are more than just historical icons—they are the leading lights in the digital revolution, offering compelling investment opportunities for those ready to ride the next wave of digital innovation.
Portfolio Grader consistently ranks these companies highly due to their strong sales and earnings growth. As the internet and entertainment world rapidly evolves, these companies have shown they can stay ahead of the curve, making them strategic picks for any smart investor.