December 6, 2022


Love your Curiosity

Bull Of The Day: Angi Homeservices (ANGI)

The world economy is shifting online with the pandemic accelerating global digitalization by 5 years in just 5 months. Angi Homeservices (ANGI) is well-positioned for the new normal, with its leading online service offerings unmatched in its niche space.

This enterprise “is creating the world’s largest digital marketplace for home services, connecting millions of homeowners across the globe with home service professionals.” Analysts have been increasingly optimistic about the company’s outlook pushing up EPS estimates.

Angi Homeservices was created when Angie’s List and HomeAdvisor joined forces through a merger in 2017. Angie’s List and HomeAdvisor provide similar functionality with both providing services from a clogged drain to home remodeling. When I went through each site, they actually asked me identical questions before getting an instant (initial) quote on HomeAdvisor and a suggested & reviewed list of contractors to choose from on Angie’s List.

Since the merger, this digitally conceived enterprise has broadened its portfolio of online service offerings with Handy in the fall of 2018 and Fixd Repair at the beginning of 2019. Both of these companies are home services-oriented and have extended Angi’s synergy fueled customer reach.

This business is built on innovation and is continuously driven by fresh new ideas through acquisitions and organic additions. The company has a bright future in the post-pandemic world as society satisfies its home services needs through online platforms. Angi’s leading positioning in this segment makes an attractive investment for the new normal.

ANGI has performed admirably throughout the COVID-crisis trade this year, having surged almost 50% year-to-date and roughly 200% since its April lows.

The stock is trading at a reason forward price-to-sales of below 4x, half the valuation of its internet service cohorts. ANGI is over 43% off its 2018 highs, and with accelerating double-digit percentage growth expected for the next couple years, this is an excellent opportunity to jump into this COVID-19 winner.

The enterprise is in the midst of closing a $500 million bond offering for 5-year notes at a rate of 3.875% (sold at face value), which will provide Angi Homeservices with liquidity for general operations and potential acquisition purposes.

The company is slowly but surely buying up their entire niche space. Its recent synergy driving purchases gives me confidence that Angi’s savvy management team will discover some lucrative opportunities amid these highly uncertain market conditions.

The enterprise’s businesses are snowballing domestically, and its European segment just turned an operational profit for the first time in its Q2 quarterly report, August 10th. Angi demonstrated a 9% year-over-year topline expansion, which was a marginal deceleration from prior quarters, but the company was able to appreciate its operating profits by 55% and profits by 82%, massively expanding its margins.

Angi Homeservice’s ability to continue growing its topline and make the proper cost-cutting measures to produce this level of margin widening amid the worst economic recession in over a decade is a signal that this business could explode when normal economic conditions resume.

Below is a TradingView chart that I drew from ANGI’s late 2018 highs to its current price level. These shares bounced off a 61.8% Fibonacci retracement level in early August, and now it’s sitting at a healthy support level, which I anticipate this stock should bounce off (both levels circled in blue).

ANGI is also sitting at oversold levels on the stochastic oscillator and coming towards that level on the RSI, which I circled in red. This, combined with the support level these shares are sitting at, should provide these shares with an excellent springboard from their current price level.

The pandemic has accelerated society’s reliance on digital platforms by years in only a few months. The world is becoming conditioned to utilize online services, and Angi Homeservices portfolio of service offerings is well-positioned to take full advantage of this COVID fueled economic shift, which is already filling its sails with a robust tailwind.

11 out of 12 analysts are calling this stock a buy today. Despite some potential short-term volatility, I think that ANGI could provide your digitally shifting portfolio with robust long-term returns.

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