Please ensure Javascript is enabled for purposes of website accessibility

Stocks to Buy When the Market is Down: The Trade Desk

By Motley Fool Staff – Updated Nov 26, 2018 at 6:32PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This programmatic advertising player has the right leadership, and the right technology, for long-term success.

The stock market is heading lower -- indeed, all the gains the major indexes made in 2018 have evaporated. So this might not feel like an opportune moment to advocate for stock purchases. Even so, about every 10 weeks, Rule Breaker Investing podcast host and Motley Fool co-founder David Gardner picks a set of five stocks to recommend, and shares them with anyone who wants to listen. Well, it's that time again, and he has more than enough companies to choose from. To narrow his options, he set four rules for this sampler:

  1. The stock had to have been a big-time winner for the Rule Breaker portfolio over the long term.
  2. It had to have hit a new high in September.
  3. It had to have fallen at least 20% from that high in the weeks since.
  4. The company name had to start with the letter T.

For Gardner's fourth pick, he chose a company that you have almost certainly been touched by, even if you don't realize it. Digital advertising specialist The Trade Desk (TTD -1.02%) is one of the leaders in getting companies' ads in front of just the audience they are seeking. In this segment, he talks about a couple of the key reasons why he likes this stock.

A full transcript follows the video.

This video was recorded on Nov. 14, 2018.

David Gardner: Stock No. 4: the company is, the fourth T, it's The Trade Desk, ticker TTD. The Trade Desk, on September 26th, two days shy of the end of September, was trading at $156 a share. Right now, it's about $111, down $45 a share. That equates to a 29% drop. This has been a wonderful stock. Like the others, it's a big-time winner. In the case of The Trade Desk, I first picked it in February 2017, that's almost two years ago, at $34. I just mentioned to you, it's dropped from $156 to $111. We're still pretty happy with that $34 cost basis. And three months later, in May of last year, it had risen to $52. I rerecommended it right there. In both cases, it's up, on the one hand, 250%; on the other, 138%, in less than two years. This has been a great winner.

What are two things that I like about The Trade Desk? The first is, I really like the CEO. Jeff Green is one of those classic visionary founder types. Highly eloquent, feels like the smartest guy in the room for his industry. If you've never heard of The Trade Desk before, you might be wondering, "What's being traded?" The answer is, The Trade Desk offers a platform where people who want to advertise come on and bid for where they're going to locate their ads. It's kind of like eBay, where you have buyers and sellers. But in this case, it's called programmatic ad buying. Instead of doing it the old way, let's say through an agency, where you would find out, what are the rates and where are you guys going to put me? You actually go right into the platform and you bid against others to have your ad seen in this or that site. It's a brilliant use of the internet where there's already so much advertising, so it makes a lot of sense to me. And it makes a lot of sense when you have someone like Jeff Green steering this company, the founder. It makes a lot of sense to me that it's been such a winner, and I expect that it will be a winner going forward. Again, the stock is down 29% in less than two months.

The second thing I like about The Trade Desk is, I'm not going to go through my six traits of a Rule Breaker stock, but it is a true Rule Breaker. The six traits that I've written about for years, that help me find stocks, one of them is top dog and first mover in an important emerging industry. This is kind of that type of a company. This is the top dog and first mover in a very relevant industry, ad buying around the internet, doing it through a programmatic platform. This is the leader. It's kind of like eBay, for what it was doing back in the day. This is a true Rule Breaker, and I like that a lot about The Trade Desk, including its outstanding performance overall.

David Gardner has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends The Trade Desk. The Motley Fool recommends EBAY. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

The Trade Desk Stock Quote
The Trade Desk
TTD
$61.17 (-1.02%) $0.63

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
338%
 
S&P 500 Returns
108%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/07/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.