Josh Brown Is Ready To Buy The Best Performing Stock In The Russell 1000: 'They Make Tons Of Money' With AI Advertising

Ritholtz Wealth Management’s Josh Brown is getting ready to buy a stock that has nearly doubled since the start of the year.

What To Know: On Tuesday's episode of “The Compound & Friends” podcast, Brown made the case for buying AppLovin Corp APP.

“This stock went crazy in 2021 with a lot of new tech companies then it got absolutely annihilated through 2022 in the tech bear market, and now it’s ripping all the way back,” Brown said.

AppLovin went public almost exactly three years ago in April 2021. The company priced its IPO at $80 per share, giving it a valuation of approximately $25 billion. The stock traded all the way down below $10 per share in late 2022 before bucking the trend in 2023. The upward price momentum has accelerated in 2024 with shares already up approximately 93% year-to-date.

“This is the absolute best performing large cap stock in the United States of America this year,” Brown said.

Brown noted that AppLovin has been the top performer in the Russell 1000 Index, which tracks the top 1000 companies in the U.S. by market cap. Although the stock is “buyable here,” he’s looking for a pullback to the 50-day moving average in the low $70s before he initiates a position.

Check This Out: Forecasting The Future: 5 Analyst Projections For AppLovin

Why It Matters: Brown is looking to buy the stock based on the technical setup, but that doesn’t mean there aren’t strong fundamentals at play.

Analysts are forecasting earnings growth of 27% in 2024 on the back of AppLovin’s positioning in the AI space, Brown said, adding that as the company continues to grow, margins are expanding. AppLovin’s operating margins were 28% last quarter, the highest in company history.

“This company has an AI ad platform. They help people build apps, and then using this AI advertising, they make tons of money in the process,” he said.

“All sorts of apps are being powered by this company’s technology, and they are harvesting the profits from the ad business on these apps. It’s a very unique business and there aren’t a lot of companies that operate in this space. This company is like the 400 pound gorilla in app advertising.”

APP Price Action: AppLovin shares were up 0.37% at $76.81 at the time of publication, according to Benzinga Pro.

Photo: Tung Nguyen from Pixabay.