SPECIAL REPORT The Top 7 Stocks for 2024

Unmasking Hidden Gems: 3 Undercover Stocks Poised for Growth

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  • All three stocks strategically focus on innovation and adaptation to changing market dynamics.
  • Yext (YEXT): With an increase in total ARR and direct ARR in Q2, it demonstrates its ability to retain and expand its customer base.
  • Heritage Global (HGBL): It experiences impressive growth fueled by rising consumer debt, brokerage contracts and lending.
  • Mama’s Creations (MAMA): It capitalizes on the rise of fresh and prepared foods with strong consumer satisfaction and a broad reach.
Hidden Gem Stocks - Unmasking Hidden Gems: 3 Undercover Stocks Poised for Growth

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Uncovering hidden gems in investments can be akin to finding treasure amid uncertainty. The financial markets are replete with companies, some quietly thriving beneath the radar, ready to break free and deliver substantial growth. The article delves into the strategies progression of three under-the-radar stocks poised for significant expansion.

First on the list is a digital experience powerhouse quietly reshaping the customer engagement landscape. Its relentless commitment to demand generation and cutting-edge product innovation is carving a niche in the competitive tech market.

Next up, the second one is a financial and industrial assets specialist. It is capitalizing on rising consumer debt and synergies across its divisions to drive remarkable growth. With a diverse portfolio and expanding market reach, this company is well-positioned to excel in the ever-evolving asset disposition industry.

The third one is making waves in the prepared deli foods category. It is capitalizing on the surging demand for fresh and convenient dining options. With an eye on expanding its product portfolio and market penetration, it aims to become a national Deli Solutions powerhouse.

Yext (YEXT)

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The SaaS innovator, Yext (NYSE:YEXT), increased its total annual recurring revenue (ARR) by 3% YoY in Q2. That demonstrates the company’s capability to retain and expand its customer base. As these efforts yield positive results, the company can anticipate significant ARR growth in the years ahead. That sustained growth in recurring revenue is crucial for long-term stability and profitability.

Also, Yext’s end-to-end demand generation efforts are making noticeable progress. While the company’s success with smaller enterprise customers is evident, the real promise lies in its potential to capture larger enterprise contracts. Despite macroeconomic challenges, extended sales cycles and budget constraints, Yext’s focus on demand generation creates a robust framework for future growth.

Further, Yext’s digital experiences solution is gaining traction in the market. The company has observed measurable increases in its total pipeline YoY. That solution addresses the growing demand for AI-enabled enhancements to digital experiences. The company’s continued innovation in this domain, including AI improvements in chat, content and reviews, positions it as a key player in the digital experience market.

Fundamentally, YEXT’s emphasis on product innovation is central to its long-term growth strategy. The recent summer ’23 release, featuring DXP enhancements, exemplifies the company’s dedication to providing cutting-edge solutions. The introduction of Yext Content, a headless CMS powered by AI and knowledge graph technology, positions the company as a frontrunner in delivering transformative digital experiences.

Finally, Yext’s marketing efforts are yielding tangible results. Global campaigns targeting key personas in marketing, support and IT have significantly increased event registrations and campaign engagement. That boosts customer acquisition and aligns various teams to deliver content with coordinated messaging and targeting, which is essential for sustainable, recurring revenue.

Heritage Global (HGBL)

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Heritage Global’s (NASDAQ:HGBL) financial assets division has experienced remarkable growth. It has a 185% YoY increase in divisional net operating income during H1 2023.

That impressive performance is primarily attributed to the soaring consumer debt levels. It results in a surge in non-performing loans and charged-off credit card accounts. The division is excelling in both brokerage contracts and specialty lending opportunities. As interest rates continue to rise, consumers are more inclined to purchase on credit, further driving asset flows.

Heritage Global has witnessed a significant uptick in its core asset disposition business in the industrial assets division, driven by increased auction activity. The company is reaping the benefits of synergies across its divisions. The industrial assets division performs well in its core auction business and contributes by sourcing auctions through American Laboratory Trading. This collaborative approach enhances efficiency and profitability while broadening the company’s reach in the industrial asset market.

The company anticipates sustained momentum in the second half of 2023. It highlights the growing synergies within the division and a robust industrial asset pipeline. That expanded market reach beyond traditional sectors, such as pharmaceuticals, includes aviation, cannabis, vertical farming, sportswear and more.

Not surprisingly, Heritage Global’s financial assets division stands to benefit from the ever-increasing credit card debt, which has reached a staggering $1 trillion. That mounting debt load provides a continuous influx of distressed assets into the market, attracting buyers and lenders.

Lastly, the company’s financial performance is underpinned by its ability to achieve substantial growth without relying on one-time, significant deals. Unlike the previous year, where large real estate deals played a prominent role, the current growth results from consistent and solid performance across all divisions.

Mama’s Creations (MAMA)

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Mama’s Creations (NASDAQ:MAMA) is strategically positioned to benefit from the macro trend of the rise of fresh and prepared foods. The deli department is one of the fastest-growing segments in grocery stores, with a market size of $45 billion. Mama’s Creations specializes in the prepared Deli foods category, representing a $25 billion market, outpacing the total Deli and F&B industry growth rates.

Notably, Mama’s Creations has consistently garnered strong consumer satisfaction rankings. Regarding numbers, 95% were satisfied with the ease of preparation, and 90% were satisfied with product quality. The company appeals to a wide range of demographics, especially women aged 45 to 54. This broad demographic reach ensures a stable customer base. Mama’s Creations is actively increasing the number of Stock Keeping Units (SKUs) per store to add one more SKU per customer.

Strategically, successful innovations like meatballs in a cup for convenience stores, club store packs and meals for one in grocery stores have all shown potential for widespread acceptance. The acquisition of T&L Creative Salads and Olive Branch expands Mama’s Creations’ product portfolio to include over 200 chicken and salad products and 50+ olive and savory products.

Additionally, the launch of Mama’s Creations platform brands like Mama’s Asian Creations, Mama’s Tex-Mex Creations and Mama’s Indian Creations at IDDBA 2023 allows the company to tap into the growing demand for international cuisine.

Overall, Mama’s Creations envisions becoming a national Deli Solutions company. It is serving the full demands of deli and fresh departments through its suite of brands. With under 20% market penetration, increased product placement and targeted programming allow ample room for growth. Finally, the company aims to make accretive acquisitions of complementary firms to boost its capabilities and network further.

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.


Article printed from InvestorPlace Media, https://investorplace.com/2023/09/unmasking-hidden-gems-3-undercover-stocks-poised-for-growth/.

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