Meta is the largest social media company in the world, boasting close to 4 billion monthly active users worldwide. The firm’s “Family of Apps,” its core business, consists of Facebook, Instagram, Messenger, and WhatsApp. End users can leverage these applications for a variety of different purposes, from keeping in touch with friends to following celebrities and running digital businesses for free. Meta packages customer data, gleaned from its application ecosystem and sells ads to digital advertisers. While the firm has been investing heavily in its Reality Labs business, it remains a very small part of Meta’s overall sales.

The United States economy is full of innovation. It has to be. Manufacturing industries that dominated the economy decades ago - textiles, televisions, even automobiles to a large degree - have moved overseas, where labor and materials costs are lower. Yet the U.S. economy, even during the pandemic and the current period of high inflation, has expanded to record levels. If U.S. corporations weren't innovating, creating new products (such as vaccines and AI) and services (such as Zoom calls) and moving into new markets, the domestic economy would not be growing, and capital would not be flooding into the country. The current high level of the U.S. dollar relative to currencies around the world attests to the confidence that global investors have in the durable and innovative U.S. economy.

We see some gems right now in the Communication Services sector, and we also like the sector overall. Argus rates Communication Services as Over-Weight. After Information Technology, Communication Services is expected to deliver the strongest earnings growth in 3Q, with a forecast of 12%, according to Refinitiv. The sector has many well-known names and is considered a 'barbell' group, with high-growth, low-income social media stocks on one end and low-growth, high-income telecom services stocks on the other. The style mix is approximately one-third "value" and two-thirds "growth." The sector is competitive, so companies in it need to be nimble and innovative, constantly assessing their clientele and staying current. Some of the names -- like Netflix, Alphabet, and Meta -- were at the top of the growth charts in the past five years or so. But like other growth sectors, even the leaders have been outshined by the glitz of artificial intelligence (AI). Market breadth has been recovering, though, and the companies listed below are among those starting to get re-recognized. The S&P 500 Communication Services Index is up 28% year-to-date, compared to the 22% gain in the broader S&P 500 Index. We see more runway for the industry. In our list this week, we look at leaders in Communication Services and sort them by those that are furthest from their 52-week high. All are BUY-rated at Argus and some are included in our Focus List and Model Portfolios.

Meta Platforms operates the world's largest family of social networking websites, including the flagship Facebook site, Instagram, Facebook Messenger, WhatsApp, Reels and Threads. The sites enable users to communicate with friends and family by posting to the site; commenting on others' posts; sharing photographs, website links, and videos; and messaging and playing games. The company also partners with application developers to add functionality to the sites, and allows users to pay for virtual goods and services through its Payments function. Meta derives about 55% of its revenue from outside the U.S. and Canada. Facebook/Meta went public on May 18, 2012. Meta Platforms changed its ticker from FB to META on June 9, 2022.