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The market is historically expensive again after a strong recovery in stocks.
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Finding good value requires looking past short-term setbacks at long-term opportunities.
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This company, down 49%, is well-positioned for long-term growth and margin expansion.
While the S&P 500 has mostly recovered from its drop earlier this year, most analysts have adjusted their earnings expectations lower due to rising trade tensions and economic uncertainty. As a result, many stocks still look expensive in today’s market.
Finding a bargain among them sometimes requires looking at stocks beaten down in recent months. Short-term challenges can often create great opportunities for long-term investors.
And even if you miss the exact rock-bottom price on a stock, you’ll have plenty of opportunities to buy shares. The phrase “The markets take the stairs up and the elevator down” can work in your favor here, giving you time to assess a company’s recovery from any setbacks.
One such stock worth examining more closely is The Trade Desk (NASDAQ: TTD). It fell over 67% from its all-time high reached at the end of last year. You could still buy shares for about half of that peak as of June 9. Here’s why you don’t want to miss this incredible opportunity.
About two years ago, The Trade Desk announced a new artificial intelligence (AI) platform, Kokai, for buying ads. It was designed to help marketers optimize bid prices for ads, improve targeting and measurement, and generally make the most of their advertising budgets.
Management is constantly adding new features to the platform as well. The more it can improve advertisers’ results, the more business it is positioned to win.
The push to transition customers from its legacy platform to Kokai went slowly, ultimately leading to a major shake-up in the company’s personnel and operations in the fourth quarter. Operational struggles combined with challenges related to Kokai led to the first earnings report where the company missed its own internal revenue forecast since going public in 2016.
The massive earnings miss led to a big sell-off in the stock. That was compounded as the Trump administration enacted new tariffs. The growing economic uncertainty caused by tariffs led many to expect businesses to pull back on advertising, which directly weighed on The Trade Desk.
Management outlined 15 factors that give it long-term confidence in the business, including internal factors like simplifying its platform, investing in AI, and completing the customer transition to Kokai.