Three underappreciated stocks shine brightly in a bustling market where big-ticket stocks often hog the limelight. Each is valued under $15 but holds immense potential for exponential growth. While their prices may seem modest, these stocks boast compelling narratives of strategic prowess and remarkable financial trajectories. It is signaling an untapped opportunity for investors seeking hidden gems.
The first one’s impressive surge in average revenue per user (ARPU) reflects a strategic pivot toward higher-value user segments. The second one, navigating the claims landscape, eyes a substantial market share despite its global presence. Meanwhile, the third stock’s subscription-based model paints a portrait of consistent growth. These companies strategically leverage technology, customer diversification and monetization strategies, positioning themselves as resilient contenders in their respective industries.
The modest stock prices belie their potential for investors seeking promising yet undervalued assets. These underdogs might redefine the investment landscape. Despite their humble price tags, these stocks under $15 offer a glimpse into the future of lucrative returns.
Opera (OPRA)
Opera’s (NASDAQ:OPRA) key achievement lies in its substantial growth in ARPU. It indicates the company’s successful efforts in catering to higher-value user segments. For instance, in Q3 2023, the 11% sequential increase in ARPU and the significant 24% year-over-year rise to $1.31 showcase Opera’s prowess in attracting and retaining users who generate higher revenues per capita.
Fundamentally, this ARPU growth represents Opera’s ability to effectively target and engage with users in diverse markets, especially in Western regions and among gaming enthusiasts. By focusing on these segments, Opera has expanded its user base and intensified its monetization strategies by appealing to audiences more likely to interact with paid services, premium features and targeted advertising.
Another critical aspect of Opera’s success has been its impressive 24% growth in advertising revenue. It now represents a significant portion, 59%, of its total revenue. That substantial growth highlights Opera’s adeptness in leveraging its user base for advertising opportunities and its success in expanding its advertising revenue streams.
The growth in advertising revenue has been attributed to Opera’s proficient execution of targeted advertising campaigns through in-house operations and by extending its audience reach. The combination of increased advertising revenue from Opera’s proprietary platforms and expanding its audience extension businesses underscores the company’s effective monetization strategies.
Finally, Opera’s ability to capitalize on the growth of its user base in Western markets has played a pivotal role in driving advertising revenue. Opera’s monetization strategies have been intelligently aligned with its user acquisition tactics. Thus, its strategy of replacing lower-monetized users with higher-value segments has led to revenue growth and sustained profitability.
Crawford (CRD-B)
Crawford (NYSE:CRD-B) strategically focuses on scaling its business across complementary service offerings within the claims space. With a global presence, the company manages an impressive volume of over $18 billion in claims annually. This highlights the company’s substantial market reach and operational capacity. Operating globally, Crawford boasts a workforce of approximately 10,000 employees and a vast network of field resources, underscoring its extensive operational infrastructure.
Despite its significant global presence, Crawford estimates its market share to be in the low single digits. That suggests a vast untapped market opportunity for the company to expand its footprint and capture a larger share of the claims processing industry. Notably, Crawford has a customer base that is diversifying and expanding. Thus, this encompasses a broad spectrum of prominent brands increasingly turning to Crawford as their preferred claims solution provider.
The company recognizes substantial growth prospects within the claims landscape. Natural catastrophes are escalating in frequency and severity, necessitating increased resources to aid policyholders in post-disaster recovery. Crawford’s non-underwriting risk approach positions it advantageously, allowing collaboration with carriers, self-insured corporations and captives to offer outsourced claim solutions.
In response to mounting pressure on property and casualty (P&C) margins, there’s a noticeable trend toward outsourcing major and complex claims. Crawford capitalizes on this market shift by leveraging its nimble and empathetic response to major catastrophe events. The company’s growing scale is a significant competitive advantage in the fragmented U.S. independent loss-adjusting market.
Finally, the company’s industry-leading insurtech capabilities, including investments in machine learning, data visualization and SaaS-based offerings, highlight its commitment to technological advancement, paving the way for double-digit growth across its platform segment. Hence, this technological edge differentiates Crawford as an innovator and industry leader in technological evolution within the claims processing domain.
Arlo (ARLO)
Arlo’s (NYSE:ARLO) remarkable achievement in subscriber growth indicates its market appeal and strategic execution. For instance, as of Q3 2023, Arlo’s robust 59.5% year-over-year growth in annual recurring revenue (ARR) signifies the success of its subscription-based business model. Also, the substantial growth in subscribers, reaching 2.5 million and growing at approximately 50% year-over-year, significantly contributes to the increase in ARR.
Additionally, Arlo strategically lowered upfront hardware costs while increasing recurring service prices. This move aimed to reduce the barrier of entry into the Arlo ecosystem, enticing more customers to adopt Arlo’s products and services. Notably, Arlo maintains robust product sales (up over 20% sequentially) despite challenges in the consumer environment. This showcased the company’s ability to position itself favorably in the competitive market.
Arlo’s ARPU of $700 per subscriber highlights the company’s efficient monetization strategies. That strong ARPU signifies the substantial value generated by each user within the ecosystem. It ensures a higher lifetime value and increased revenue potential. Favorably, the company has kept its momentum in quarter-over-quarter growth in paid accounts, with an expected range of 170K to 190K new paid accounts.
Finally, Arlo has transitioned towards a services-first approach, where services accounted for nearly 40% of total revenue and represented 86% of total non-GAAP gross profit. That highlights the effectiveness of its strategy in bolstering recurring revenue streams and overall ARR. Overall, the consistent growth trajectory in the installed base and paid accounts, combined with the upward trend in service revenue, indicates a sustained momentum in revenue generation and reinforces the potential for continued ARR growth.
On the date of publication, Yiannis Zourmpanos did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
