This Retail Marketing Leader Has a Huge Advantage

|September 18, 2023

Record debt… rising fuel costs… stubborn inflation…

If these headwinds in the economy continue to get stronger… companies are going to need to squeeze everything they can from every sale they make.

That’s where my Stock of the Week can help. It’s a leading provider of outsourced sales and marketing solutions to consumer goods companies and retailers.

After struggling with profitability for a few years…the company has turned the corner. It has a lot of potential for growth.

And thanks to pessimistic forecasts… it is trading at a dirt-cheap valuation.

Plus… the stock could soar fourfold and still be at only 2021 levels!

There’s a lot of upside here.

Get all the details on the company – including its ticker – in my latest video.

Click the image below to watch it.

Note I’d like to say a big thank you to everyone who joined me at the AI Super Trader Summit last week. The response has been tremendous. I’m thrilled to share my exclusive strategy for targeting winning stocks with the help of AI. If you missed the big event, you can catch a special rebroadcast HERE for a limited time.


See How Alpesh Targets Winning Stocks With the Help of AI Here

Hi, friends, and welcome to another Stock of the Week. It’s another opportunity to see how we process the information within the hedge fund… and to learn how you should be looking at stocks as well.

I’m Alpesh Patel, as you know, the founder of GVI Investor and also the founder of a hedge fund.

The Stock of the Week is Advantage Solutions (ADV). It’s a provider of outsourced sales and marketing solutions to consumer goods companies and retailers. Its services include headquarter sales, retail merchandising, in-store and online sampling, digital commerce, omnichannel marketing, retail media, and so on. So it’s very much in the marketing space.

Whatever happens with the economy, particularly if it tightens, companies are going to need to squeeze out as much return from their sales as possible.

That’s where a company like this comes in. Advantage has offices throughout North America and strategic investments in Africa, Asia, Australia and Europe as well. So we’ve got that geographic diversification that ideally we want.

Revenues have been growing, which, of course, is good. It’s had problems with profitability, which seems to now have turned around. That’s important because sometimes companies can see their share prices rise after a series of declines if the declines have led people to be overly pessimistic… and have led people to stop looking at the company and start thinking, “Okay, it’s not going to be on our radar for a while.”

This one seems to have turned the corner this year and started getting back into growth. And as a result, as you’ll see, I think it’s got some good, strong potential.

So let’s look at the numbers. On my proprietary Growth-Value-Income algorithm, which measures the growth, value, and income of a company, it’s a 7 out of 10. Anything with a 7 or higher meets my minimum requirement.

Remember, this measures revenue growth, profit growth, dividend yields and valuations, such as share price relative to profitability. So all of these factors are put into place. So just because profits might be declining, it doesn’t necessarily mean it’s a death knell for the company.

Now, this company’s forecast P/E – in other words, its current share price compared to its forecasted profitability – is at a multiple of only 5.9. That is cheap not only for the company but also for the stock market and for the sector.

Now, all of those things mean that there is some evidence for what I was saying, that the market has become overly pessimistic and – even when the company’s generating profits – is pricing the stock well below what it should be, as shown by the forecast P/E ratio… albeit the cash return on capital invested (CROCI) is only 1.8%. That’s well below what I’d like to see.

CROCI, as you know, was invented by Deutsche Bank Wealth Management and is used by Goldman Sachs Wealth Management for its wealthiest clients. If you want to understand why it’s important and what is behind that formula, click here.

So the CROCI at 1.8% means not everything is going as nicely as I’d like to see.

Price has risen over the last few months, which is why I think it’s turned a corner. It’s not overly volatile as a company. Its risk-reward profile is not too bad. When I look at the stock price, I see it’s gone from basically pennies to… pretty much doubling this year… well, during the course of this year. So from around May to now, it’s doubled in price. Given where it is now, if it increased about fourfold, it would only be at its 2021 level.

So you can see there’s a lot of upside to be had here, potentially. Nothing’s guaranteed, of course.

And on a discounted cash flow basis, it’s significantly undervalued. The current price is only $2.70. Very much penny stock territory.

Earnings are forecast to grow over 119% per year, depending on how you measure these things. So we’ve got quite a few things which suggest that there is upside for the company, and it ticks a lot of boxes.

I hope that gave you some educational insight into how we do things. Of course, when we’re looking at the research reports, we go into a lot more detail.

I want every company to tick every single box, but this gives you a sort of “tip of the iceberg” insight into how we do things.

Thank you very much.