4) Margins Set Off Good Advertising Agency Stocks From Bad
Deutsche Bank analysts say that a few stocks in the advertising space might be able to distinguish themselves from the pack. Assumptions are conservative for the industry overall, but there's enough evidence to justify a small revenue upgrade, according to the firm:
"We have raised our 2012 organic revenue forecast from 1% to 2.5-3% on average or the sector. In summary, this incorporates -1.5% for Europe, +2-5% U.S., +5-8% rest of the world."
Margins set off good performers from the bad in 2011 and that will likely again be the case this year. Deutsche writes: "We are not saying that margin expansion should be managements' paramount strategic priority: we believe investors, in any case, attach higher importance to organic revenue as the driver of multiples (even though this is not an audited figure). But we do believe that, if revenue growth remains healthy, operating leverage should also be a consideration for the investment case."The firm is a buyer of European firms Wausau Paper (WPP) and Havas, and New York based Omnicom Group (OMC). For Omnicom, the analysts are targeting $50 per share on the stock. Shares now trade near $47.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV