5 advertising stocks you should have on your watchlist

Everywhere we turn we are saturated by advertisements. Whether they’re staring back at us from a billboard, flashing up on our computer screen or wrapped in stickers around the bus we are on.

Eye-catching advertising costs big bucks and several of the companies behind them are ASX high-flyers that every investor should have on their watchlist.

oOh!Media Ltd (ASX: OML)

Home media company oOh!Media Ltd has been in the news lately for snaring advertising rights to Qantas Airways Limited (ASX: QAN) in-flight entertainment.

The good news has seen oOh!Media hover on the S&P/ASX200 gains list this week with an April 4 closing price of $4.63 – up 1.7%.

Share prices for oOh!Media have been volatile over the last 12-months, sinking to lows of $3.86, but the Qantas deal will see oOh!Media’s customers exposed to more than 28 million domestic and international passengers annually after oOh!Media managed to take over the contract from multi-screen advertiser MCN.

oOh!Media had a strong FY17 with revenue growth of 13% and statutory NPAT up 35.5% to $33.1 million.

With a fully-franked dividend of 15c per share and plenty of term left on contracts that represent more than 65% of its revenue, investors seem confident oOh!Media has decent earnings potential going forward.

One to watch.

APN Outdoor Group Ltd (ASX: APO)

Shares in APN Outdoor Group Ltd have had a hard 12-months, but have been tracking up steadily since mid-March, closing on April 4 up 1% at $4.70, still a fair way off its $5.79 price at this time last year.

APN logged a 4% revenue boost for the year ended December 31, 2017, lifted mainly by its digital arm which rose 13% on its own merit.

APN saw an NPAT drop of 9% for the same period, but the company maintains a strong balance sheet and dividend yield of 5.8%.

APN has its sights set on snatching contracts from its competitors in the medium term while maintaining its existing contracts and it will be interesting to see if it manages to increase its market share in this manner.

REA Group Limited (ASX: REA)

As the owner of much-loved, REA Group Limited is trading at 31 times its FY19 estimated earnings, with its share price tracking up steadily in the last 12-months from $60.71 at this time last year to its April 4 close of $77.82.

REA is in the midst of managing an offshore expansion into the US, India and South East Asia, and if it can leverage these markets it might have a shot at hitting the $90 share price target Citigroup slapped on the share a month ago.

REA is tracking around 12% above its 200-period moving average and it doesn’t look like there will be a slowdown anytime soon for the property website giant.

Domain Holdings Australia Ltd (ASX: DHG)

Domain Holdings Australia Ltd caused some shockwaves on the ASX when it listed in November 2017 and all eyes have been on the stock ever since, with prices down from the IPO of $3.69 to a $3.15 close on April 4.

Domain relies on the same premise that REA Group does to survive – that Australians are addicted to property – and so far its time as a listed company has been relatively uneventful, save for an unexpected CEO exit with the departure of Anthony Catalano which saw share prices plummet 6.3%.

Domain is yet to log any significant financial results, but all eyes will be fixed on the online advertiser when it does.

SEEK Limited (ASX: SEK)

It would be remiss to sum up the top advertisers on the ASX without giving online employment classifieds platform SEEK Limited a mention.

SEEK shares have been on a downward swing since mid-March, dropping from $21.01 on March 12 to its April 4 close of $18.48, but over the last 12-months has been one of the best performing blue chips on the S&P/ASX 200.

Investors may be spooked by rumours Google for Jobs is due to launch in Australia in the future, which would certainly give SEEK a run for its money.

Morgans downgraded SEEK to sell rating from a hold in March, cutting the price target on its shares from $21.07 to $19.07 but it’s unlikely this high-flyer will be down for long.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has recommended REA Group Limited and SEEK Limited. 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 Scott Phillips.

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