In the stock market, giant companies dominate mainstream attention. However, hidden stocks, similar to treasures, wait to be unearthed. Among these are the following three stocks priced under $15. They are often overlooked but hold the potential to yield exponential returns.
While their stock prices may not boast the same digits as their high-profile counterparts, these companies, from financial innovations to IT solutions, operate in a niche market that may expand decisively.
Let’s take a deep dive into the potential of these hidden stocks and the ways they may transform a modest investment into a high-return windfall.
SoFi (SOFI)
SoFi’s (NASDAQ:SOFI) bottom-line solidity, margin expansion, member growth, and product growth uplift the multifold valuation possibility.
For instance, the company achieved a positive GAAP net income of $48 million in Q4 of 2023. That represents a considerable improvement against a $40 million loss in Q4 of 2022. This positive net income signifies SoFi’s fundamental capability to breed sustainable profits and derive bottom-line growth.
Additionally, the adjusted EBITDA margin hit 30% in Q4, which aligns with the company’s long-term target. Furthermore, the sequential and year over year (YOY) net interest margin expansion to 6.02% suggests sharp management of interest income and expenses.
However, SoFi has attained considerable growth in its member base and product offerings through solid customer acquisition and user engagement. For instance, adding nearly 585K new members in Q4 led to a total membership of over 7.5 million.
Finally, SoFi maintains stability and a strong balance sheet. For instance, Tangible book value boosted by $204 million in Q4, hitting $3.5 billion. Therefore, this steady growth demonstrates the company’s solid financial standing and asset quality, providing a solid foundation for value growth.
Unisys (UIS)
Technology giant Unisys (NYSE:UIS) has delivered a high non-GAAP operating margin for 2023 for rapid valuation growth. At 7%, the margin exceeded the original guided ranges and the upwardly revised ranges provided for 2023. Additionally, the adjusted EBITDA margin was 14.2% for the year, indicating sharp cost management.
On the other hand, Unisys has attained solid client loyalty, which can be observed in its high contract renewal rate and new business signings. Notably, UIS renewed 96% of contracts worth over $1 million in total contract value (TCV) in 2023. This indicates high satisfaction among its client base.
In addition to contract renewals, Unisys new business TCV increased by 18% in 2023. Moreover, Q4 new business TCV increased by approximately 50% sequentially and 80% YOY, primarily based on growth with existing clients.
Additionally, the new logo pipeline increased by 32% YOY. Overall, the growth in the pipeline signals positive revenue generation potential for Unisys. Fundamentally, a solid pipeline ensures a steady flow of leads for the company to pursue. Hence, Unisys may rapidly capitalize on market leads and generate long-term business growth.
Pagerduty (PD)
Pagerduty’s (NYSE:PD) revenue growth and customer metrics are vital fundamentals for valuation expansion.
For instance, PagerDuty delivered solid top-line growth in Q3 of 2024. Revenue jumped 15.4% YOY to $108.7 million. The constant growth trajectory in top-line highlights PagerDuty’s market traction and demand for its solutions. Also, PagerDuty’s operating margin is booming. Based on the operational edge, the company can derive decisive profits, with its non-GAAP operating margin reaching 13.8%.
Similarly, PagerDuty’s solid financial standing can be observed in its liquidity. With a total of $575.3 million, the company can invest in growth moves, research, and strategic acquisitions. Additionally, positive operating cash flow of $16.9 million and free cash flow of $15.2 million reflect the company’s capability to derive cash from operations.
Additionally, PagerDuty’s annual recurring revenue (ARR) grew 13% YOY to $438.9 million. Therefore, the customer boosts with an ARR over $100K of 10% YOY to 778 suggest high growth in PagerDuty’s enterprise customer segment. Overall, these developments represent higher revenue and strategic value.
As of this writing, Yiannis Zourmpanos held a long position in SOFI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
