Hidden Titans: 3 Stocks Ready to Outperform in the Next Earnings Season


  • These stocks under $15 present opportunities for investors as they navigate market trends and capitalize on growth strategies.
  • Celestica (CLS): Reports constant top-line growth, reaching $8 billion in 2023, driven by cloud solutions.
  • Applovin (APP): Achieves revenue growth each quarter in 2023, reaching $3.3 billion, with expansion plans.
  • Zenvia (ZENV): Records stable revenue amidst Brazil’s economic challenges, maintaining a solid client base.
Earning Season - Hidden Titans: 3 Stocks Ready to Outperform in the Next Earnings Season

Source: Shutterstock

Out of all the alternatives, three stocks bound to outperform decisively in the next earnings season stand out as strong candidates. These businesses provide services in electronic manufacturing, application software, and other areas. They present a special combination of development potential and durability.

The first one’s consistent revenue growth, primarily due to its substantial success in cloud solutions, indicates a business skilled at grabbing hold of new market possibilities. On the other hand, the second one has a steady revenue growth trajectory through 2023 and deliberate plans for development into new verticals. This demonstrates a firm is adaptable enough to overcome obstacles and take advantage of changing consumer trends. Similarly, the third company’s resilience to the market and strategic sense are demonstrated by its ability to sustain steady revenue in the face of Brazil’s economic challenges.

These stocks are attractively priced and possess a superior operational edge and strategic vision. They lead in various technology sectors, united by their commitment to flexibility, creativity, and client-centricity. These undervalued stocks present a compelling opportunity for investors to diversify their portfolios and capitalize on emerging market segments as the earnings season looms.

Celestica (CLS)

Person holding cellphone with website of Canadian electronics company Celestica Inc. (CLS) on screen in front of logo. Focus on center of phone display. Unmodified photo.
Source: T. Schneider / Shutterstock.com

Due to the success of its Advanced Technology Solutions (ATS) and Connectivity & Cloud Solutions (CCS) businesses, Celestica (NYSE:CLS) has consistently increased its revenue.

Additionally, Celestica’s top-line reached almost $8 billion in 2023 after growing by 10% from 2022. This solid boost signifies that the company may seize market opportunities and thrive. In Q4 2023, the CCS segment accounted for 62% of total sales, demonstrating its vitality to Celestica’s overall revenue performance. This suggests the business may take advantage of the growing cloud and connectivity solutions market.

In Q4, revenue from the enterprise end market increased considerably, rising 46% year- over-year. The demand for AI/ML computation from hyperscaler clients was the core driver of this boost. Celestica’s impressive achievement in this particular category signifies its capacity to adapt to the changing demands of its clientele and use the latest developments in the technology sector.

Finally, in Q4, the CCS segment margin increased by 80 basis points year-over-year to 6.7%. Higher volumes and a better mix, especially with hyperscaler clients, were the main drivers of this development. 

Applovin (APP)

AppLovin (APP) logo and page displayed on phone and computer screen
Source: shutterstock.com/T. Schneider

In 2023, Applovin (NASDAQ:APP) had a top-line boost each quarter despite encountering difficulties in H1. Additionally, it derived $3.3 billion in sales in 2023, a 17% boost from 2022. The constant increase in income throughout 2023 reflects the fundamental flexibility and resilience of Applovin’s business strategy. Notwithstanding early difficulties, the company can turn things around and see stable growth because of product improvements, market trends, and expansion moves.

Moreover, in 2023, the business repurchased and withheld 54.3 million shares, a drop of roughly 10% in the total outstanding shares. To manage outstanding shares, it authorized a $1.25 billion increase in the share repurchase authority. Thus, decreasing the number of outstanding shares may enhance stock prices and increase EPS.

Finally, the company intends to grow by entering additional markets and verticals, such as non-gaming and CTV (connected TV). To sum up, Applovin is confident in its ability to maintain growing momentum, as seen by its ambitions for expansion.  

Zenvia (ZENV)

hands at desk near laptop computer, with one hand holding a pile of hundred dollar bills. Bank stocks
Source: shutterstock.com/CC7

Zenvia (NASDAQ:ZENV) maintained constant sales growth despite Brazil’s challenging macroeconomic environment. The company’s consolidated sales increased by a solid 21% year-over-year (YoY) in Q3 2023 to BRL 219 million. This expansion signifies how well Zenvia’s tactics work in overcoming financial difficulties and seizing market opportunities.

Moreover, Zenvia’s income stability is demonstrated by the company’s fundamental capability to maintain a consistent clientele, with 13.6K active users. This customer base shows the company’s capacity to hold onto clients in the face of market swings and provides a solid basis for continued expansion. Moreover, the endurance of the clientele implies a high degree of consumer loyalty.

In summary, despite a 3.1% YoY decline in gross profit during Q3, Zenvia could sustain a 38.4% gross margin. This suggests the business maintains bottom-line levels by skillfully controlling expenses and pricing policies. Lastly, during Q1-Q3 2023, the company’s G&A spending ratio as a percentage of revenue decreased from 18.5% in 2022 to 16.7% in 2023. Therefore, this suggests that Zenvia is gradually increasing its cost edge and progressively managing overhead expenses.

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.

Yiannis Zourmpanos is the founder of Yiazou Capital Research, a stock-market research platform designed to elevate the due diligence process through in-depth business analysis.

Article printed from InvestorPlace Media, https://investorplace.com/2024/04/hidden-titans-3-stocks-ready-to-outperform-in-the-next-earnings-season/.

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