In recent years, it seems like any stock associated in some way with AI, or artificial intelligence, has been a magnet for investor interest.
But the fact is, many AI stocks are speculative, based on hype of the lure of future earnings. As a result, the market is flush with overpriced AI stocks with no real earnings to speak of.
But there are some AI stocks out there that are actually cheap and not overhyped, including one you’ve probably never heard of, Consensus Cloud Solutions (NASDAQ:CCSI).
Consensus Cloud Solutions went public in 2021 after it spun off of digital media company Ziff Davis (NASDAQ:ZD).
The company is known for its eFax service, which allows users to send digital faxes via email, text, and other digital means. But it has branched out since then to help businesses, primarily in healthcare, legal, and financial industries send and receive digital information securely, including its cloud faxing service.
Earlier this year, it ramped up its capabilities by adding AI faxing products for the healthcare industry. In short, AI faxing takes unstructured documents and transforms them into structured, actionable data. Using natural language processing (NLP) and machine learning, it identifies and highlights the key information in the documents for the clinician. It not only improves efficiency, but it helps to accelerate patient treatment.
The stock has struggled since it went public, with a roughly four-year annualized return of -6.1%. After a series of down years from its peak of $66 per share in October 2021, its stock price has dropped to about $27 per share.
This year, Consensus Cloud stock has bounced back, rising 16.3% year-to-date and 23.2% over the past year.
Consensus Cloud stock got a jolt after it released its second quarter earnings, as it beat revenue and earnings estimates. Importantly, it boosted its adjusted EBITDA margin to 54.8%, the high end of its range, and increased its free cash flow, which is critical to fund investments in its growth.
Further, in the second quarter, it raised its adjusted earnings per share range by about 22 cents per share, reflecting its better-than-expected growth so far in 2025.
Wall Street analysts are mostly bullish on the stock, as 80% rate it as a buy with a $32 per share median price target. That would suggest 14% growth.
With its AI faxing helping to drive gains in its corporate business, which saw a 6.9% increase in revenue, Consensus Cloud Solutions has some solid momentum. In addition, the healthcare sector has been growing at a rapid clip and that is expected to continue.
It is hard not to like this stock at its dirt-cheap valuation, trading at just 6 times earnings. It may not put up NVIDIA-like numbers, but it looks like a solid option.
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