Jefferies Top Stocks to Buy for the Online Video Advertising Revolution

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The future often seems to knock at the door when you may not be ready. Facebook aficionados recently received a message from founder Mark Zuckerberg explaining that the social media giant was thinking about the addition of video advertising. He explained how they would barge in periodically for anywhere from 10 to 30 seconds with video advertising. He also asked Facebookers to chime in and let him know just what they thought about the idea. One would suspect many of the replies were less than supportive.

In a fascinating new research report, the analysts at Jefferies point out that online video is one of the fastest growing advertising markets with large upside potential. They estimate there is $60 billion in U.S. TV advertising yet to be disrupted. Their research report covered  the top players in the digital video value chain, and highlighted which ones they believe are the most likely to benefit. Here are the top stocks to buy now.

AOL Inc. (NYSE: AOL) made a huge move yesterday by announcing it would buy Adap.tv, which helps businesses buy and sell ads for online video electronically, for $405 million, its largest acquisition since the 2011 purchase of the Huffington Post. In recent months, AOL has turned its attention to video advertising as it tries to get more sales from marketers and reduce its reliance on lucrative but dwindling revenue from its dial-up subscription service. The Jefferies price target for the stock is $50. The Thomson/First Call estimate is much lower at $42.

Facebook Inc. (NASDAQ: FB), as mentioned above, already is preparing its more than 1.1 billion unique users for the online advertising onslaught. The company recently crushed earnings estimates and finally has traded back above the original initial public offering price of $38.  Facebook seems to have taken a huge advantage on Google’s freeware, launching its Facebook Home for Android devices. Analysts say that Facebook Home has played a big part in driving mobile ad revenue. Jefferies price target for the social media giant is $37 and may soon be revised higher. The consensus price target is also at $37.

Google Inc. (NASDAQ: GOOG) is the largest force to be reckoned with in the new age of online video advertising. Its purchase of YouTube already has set the table for its online advertising strategies, and investors can expect a much larger presence in the near future. Jefferies has a $1,000 price target on the Internet and search leader. The consensus price target is set at $998.

Tremor Video Inc. (NYSE: TRMR) is a small cap name that could also end up being purchased by a larger entity. The company  provides technology-driven video advertising solutions for advertisers and agencies, and publisher partners in the United States and internationally. The company’s solutions enable brand advertisers to engage consumers in various Internet-connected devices, including computers, smartphones, tablets and connected TVs. The Jefferies price target for the stock stands at $12, while the consensus target is $12.25.

While these were the focus companies of the Jefferies report, other top stocks were featured prominently in their analysis.

Yahoo! Inc. (NASDAQ: YHOO) is expected to also be a large player in the online advertising arena. The company recently hired former Google exec Bernardo Hernández González, a longtime favorite of CEO Marissa Mayer when she was at the search company, to lead its Flickr photo-sharing unit. The consensus price target for Yahoo! is $30.

CBS Corp. (NYSE: CBS) is still in the middle of a very high-profile battle with Time Warner Cable Inc. (NYSE: TWC). Investors can expect the major networks to exploit online advertising and promotion through their well-visited websites. The consensus price target for CBS is posted at $60. Investors are paid a small 0.9% dividend.

Microsoft Corp. (NASDAQ: MSFT) has multiple websites and venues to support online advertising efforts. The software giant also has an advantage with a gigantic gaming audience using its new Xbox. The consensus price target for the stock is $35, and investors are paid a respectable 2.9% dividend.

Netflix Inc. (NASDAQ: NFLX) is becoming the ultimate viewer destination as younger viewers tire of the more standard network and cable fare. With incredible streaming capability, and top new original programming, the stock has been on fire over the past year. The consensus price target is a $240.50, which is below current trading levels.

Comcast Corp. (NASDAQ: CMCSA) has multiple platforms from its cable, network and on-demand offerings to take advantage of the online advertising bonanza. The company recently posted solid earnings and look to take advantage of growth at NBC Universal. The consensus price objective for the stock is $51, and investors receive a 1.7% dividend.

Online advertising will prove to be an annoyance to viewers. It most likely won’t be such an annoyance the viewers tune out. The staggering amount of money to be directed to this new advertising venue will drive not only earnings, but innovation as well. Adding these stocks to a portfolio is adding a slice of the advertising future.