By Paul R. La Monica
"Signs. Signs. Everywhere there's signs." That was a lyric in a 1970s hit rock song that was later covered by Tesla -- the band, not Elon Musk's electric-vehicle company -- in the early 1990s. But it's also a potential lesson for investors looking for stocks that may hold up well in an age where artificial intelligence -- powered by the likes of Musk's SpaceX -- dominates everything.
Outdoor advertising is an example of a so-called HALO business, one that has the type of "heavy assets, low obsolescence" that likely won't be disrupted by AI. Billboards aren't going anywhere, and people will continue to see product pitches staring down at them when they -- or their autonomous vehicle -- drive down the highway.
And it's not just on the road. Commuters see advertising everywhere, whether they're riding the train or taking the bus to work. Those are key reasons why two outdoor ad giants, Lamar Advertising and Outfront Media, have been hot stocks this year. Lamar is up 20%, while Outfront has soared more than 35%. Both stocks, which are classified as specialty real estate investment trusts, could continue to rally.
Analysts are forecasting steady revenue growth for Lamar and Outfront, with consensus estimates calling for 5% annual top-line growth from a year ago at Lamar and an 8% year-over-year increase from 2025 at Outfront. "Ad spending is alive and well in the out-of-home industry," writes Morgan Stanley analyst Cameron McVeigh. Lamar, in particular, looks good, with 75% of its full-year revenue goal already booked, the strongest since the Covid pandemic, McVeigh notes.
What's more, current estimates could wind up being conservative thanks to some positive catalysts yet to come. McVeigh noted that Outfront, which has a big presence with transit agencies in key urban markets, will benefit from increased advertising demand tied to soccer's World Cup this summer. Games will be played in several top U.S. markets, including the New York/New Jersey metro area, Los Angeles, San Francisco, and Miami.
The November midterm elections should give Lamar another boost. CEO Sean Reilly said on its latest earnings call on May 7 that political advertising is "pacing well ahead of where it was in 2024 and should continue to be a nice tailwind," while TD Cowen's Lance Vitanza notes that the tone from Lamar management on the earnings call "was among the most constructive we have heard from the company...particularly around forward bookings, national demand, and the likelihood of revisiting guidance upward in August."
As for Outfront, Vitanza notes that "digital momentum is building" as the company invests more in display technology, particularly with the giant New York Metropolitan Transit Agency. That helped boost digital transit ad revenue by 26% in its latest quarter. As a result, Vitanza recently raised his price targets for both Outfront and Lamar, to $38 and $170, respectively, up 15% and 11% from recent levels.
Both stocks trade at a premium to the broader market, with Outfront valued at 25 times earnings estimates for this year, while Lamar fetches 26 times. Neither seems outrageous, and both remain solid choices, especially for income-oriented investors, with Outfront yielding around 3.8% and Lamar yielding 4.2%.
The billboard business continues to stand tall.
Write to Paul R. La Monica at paul.lamonica@barrons.com
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(END) Dow Jones Newswires
May 22, 2026 01:30 ET (05:30 GMT)
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