Discovering dormant stock market giants ready for a comeback might be likened to discovering a blue lobster in the ocean. Several undervalued companies exist in the financial and tech sectors. Here are three of them, each with a distinct story that suggests a coming market upswing. These businesses are quietly setting themselves up for big growth and profitability.
As a leader in the financial services industry, the first one has blazed a path toward diversification by lowering its dependence on a single source of income and broadening its reach into unexplored market areas. With its strong customer growth metrics and targeted enterprise penetration, the second one is a prime example of flexibility and resilience in adversity. In the meantime, the third one’s concentration on recurring income sources and strategic changes highlights a road map for long-term profitability and development.
Learn more about these sleeping giants in the stock market that are about to spring to a boom. These stocks may lead a comeback with a massive rally, offering high returns to savvy investors.
SoFi (SOFI)
SoFi (NASDAQ:SOFI) has attained a considerable milestone in diversifying its top-line. At the top, 40% of its adjusted net revenue in the fourth quarter came from its financial services and digital platform.
Moreover, diversification minimizes risks and boosts stability by eliminating the company’s reliance on a single revenue source. Also, it demonstrates that SoFi has sharply expanded into other financial services. Beyond its traditional lending sector, it positions itself for long-term valuation growth in a range of market segments.
Notably, the Financial Services division had exceptional growth in Q4, with net sales rising by 115% year over year (YOY). Additionally, the Tech Platform division saw faster revenue growth, with a YOY increase of 13%. These markets play a major role in SoFi’s total revenue diversification and profitability. Hence, this demonstrates the potency of its multipronged business approach.
Furthermore, SoFi holds confidence in maintaining its pace by offering an upbeat outlook and future growth expectation. From 2023 to 2026, the company expects compound top-line growth of 20% to 25%. This is primarily due to the expansion of its core companies and possible new business lines. Lastly, SoFi anticipates expanding its EPS and holding high margins into 2026.
PagerDuty (PD)
PagerDuty (NYSE:PD) has demonstrated solid customer growth and retention numbers. It’s a reflection of its fundamental capability to attract and retain customers over time. As a result, the company had over 15K paying customers as of January 31, 2024. Hence, the customer base was stable compared to the previous year. Conversely, PagerDuty’s total number of users (both paid and free) surpassed 28K, growing significantly.
In addition, PagerDuty’s dollar-based net retention rate, as of January 31, 2024, was recorded at 107%. This level indicates its ability to retain clients and upsell. Additionally, PD shows it can meet the demands of big businesses by making notable progress in entering the corporate market. Interestingly, the company saw a significant uptick in its high-value customer base. By Q4 of 2024, the number of new customers spending over $100K annually had doubled, indicating robust growth in this key segment.
Finally, as of January 31, 2024, PagerDuty had secured 58 clients with yearly revenue of over $1 million, a 16% increase from the previous year. Overall, these numbers show how PagerDuty may draw in valuable business clients and increase its market share.
DecisionPoint (DPSI)
DecisionPoint’s (NYSEAMERICAN:DPSI) revenue growth indicates a significant demand for its mobility-first business services and solutions.
In addition, record gross margins nearing 28% were achieved in the same quarter because the company’s strategy changed towards a stronger mix of software and services. Fundamentally, this margin increase indicates that DecisionPoint’s approach is working to boost profitability and capture value across its services.
Moreover, DecisionPoint’s focus on high-margin service offerings is a major factor in its expansion and profitability. By carefully adjusting its revenue mix to include more profit-margin services, the firm established record quarterly gross margins of 27.6%. Therefore, DecisionPoint’s technique maximizes revenue through product portfolio optimization.
Furthermore, DPSI’S emphasis on recurring income streams is a key component supporting its sustainability in long-term growth. The company’s goal is to steadily raise the percentage of income from services and software to 50% to create reliable and steady revenue streams.
Overall, by lowering reliance on one-time product sales, recurring income from services like managed services and SaaS solutions increases overall profitability and revenue visibility.
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.
