3 Growth Stocks With Untapped Potential Galore
Another week, another round of economic data. Yesterday, October job openings in the United States were again revised downward and fell to their lowest number since March 2021, underscoring the idea that the economy is indeed cooling. Ultimately, this will give the Federal Reserve some breathing room or even give the central bank reason to pause its rate hike cycle. Either way, this is mixed news for equities markets. Yes, interest rates have probably peaked, but the economic engine of the U.S. economy appears to be slowing, which could jeopardize many companies in the near term.
However, there are some growth stocks with enough untapped potential that could help them defy odds during an economic slowdown. Below are three such stocks.
Clear Secure (YOU)
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Clear Secure (NYSE:YOU) is a company that provides biometric identity verification solutions for travelers, venues and workplaces. The company’s platform uses iris and face scans to verify customers’ identities and grant them access to various services and locations. Clear Secure also offers a consumer subscription service dubbed “CLEAR Plus” wherein average consumers can gain access to dedicated fast lanes at airports via the company’s touchless biometric verification.
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Back in 2020, the TSA awarded Clear Secure a contract that will give the company the right to handle the subscription renewal processing and new enrollments for the TSA PreCheck program. Through this contract, Clear Secure will also be able to cross-sell and offer a CLEAR/TSA PreCheck bundled subscription for new customers. Since then, Clear Secure has been able to increase revenue substantially. In their recent third quarter earnings report, Clear Secure posted a 38.4% YoY increase in revenue and a similar 31.6% increase in total bookings. Net income also remained positive for the company in the same period.
SmartRent (SMRT)
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SmartRent (NYSE:SMRT) is a tech company that provides smart building hardware and cloud-based SaaS smart home solutions for property owners, managers, and residents. In particular, through its WiFi-enabled “Hub Device,” SmartRent is able to integrate its SaaS solutions with smart home hardware so that landlords are able to remotely monitor and control their properties’ energy usage, security, access, and maintenance.
The company has come a long way since it went public in early 2021 through a $2.2 billion merger with a special purpose acquisition company (SPAC). In the third quarter, SmartRent reported revenue climbed 22% on a year-over-year basis, exemplifying the company has been able to keep revenue growth in the solid double-digits, despite the current gloom surrounding the real estate market and the broader macroeconomic environment.
GitLab (GTLB)
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GitLab (NASDAQ:GTLB) is a software company that offers a single platform for the entire DevOps lifecycle, from planning and coding to testing and deploying.
Leveraging artificial intelligence (AI), the company’s platform enables developers to collaborate more efficiently and deliver software faster. The company reported strong results for its Q2 FY2024 period, with revenue increasing organically by 38% year-over-year to $139.6 million. GitLab’s Q3 FY2024 results were even more impressive. Not only did the company report revenue growth of 38% YoY, but GitLab also announced its first adjusted operating profit as more customers signed up for larger deal sizes.
Larger deal sizes from customers underscore how Gitlab’s customers are less worried about the macro environment and are willing to purchase worthwhile solutions.
On the date of publication, Tyrik Torres did not have (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.
Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.
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