Why the oOh!Media Ltd share price jumped 7.3% today

Credit: APN Outdoors

Shares of oOh!Media Ltd (ASX: OML) have rocketed 7.3% higher today to $4.72, putting them just over 4% beneath their current all-time high of $4.93.

Having returned to the ASX in December 2014 (it was previously listed in 2004 under the name Outdoor Media Association), oOh!Media has thus far generated significant profits for investors as one of Australia’s leading out-of-home advertising businesses.

Revenue has grown strongly, as have earnings, with the company quickly replacing its static advertising spaces with new digital signs and billboards. These should allow the company to improve margins over time, whilst also expanding the company’s pool of potential customers.

These factors are likely part of the reason why Credit Suisse has initiated guidance on the business with an “Outperform” rating and a price target of $4.95. That doesn’t leave a huge amount of room between its current share price and the target, but it shows that oOh!Media is building its fanbase.

Indeed, the shares could climb well beyond that target if the business can exceed its own revenue and earnings guidance, and if it can continue to grow its portfolio of digital advertising spaces. The shares aren’t necessarily cheap right now, but further growth could be in store for long-term investors.

Of course, that’s not to say it would be a risk-free investment. oOh!Media faces competition, including from APN Outdoor Group Ltd (ASX: APO) (whose shares have also risen 5.5% today), while a potential downturn in the economy could have an impact on the advertising market as well. That’s something investors should certainly keep in mind.

If you're not too keen on owning oOh!Media's shares however, there are plenty of other great businesses you can buy today. The Motley Fool's renowned dividend investing guru recently revealed his newest dividend buy recommendation and short list of 3 Best Dividend Buys Now. Which means if you're reading this message right now, you're not on the list to uncover their names before they potentially go gangbusters. Simply click here to learn more about these shares.

Motley Fool contributor Ryan Newman has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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