Finding undervalued stocks to buy may greatly improve an investing portfolio’s ability to capture enormous long-term profits. This piece examines three inexpensive yet potential stocks. Comprehending the underlying principles of these businesses is important since doing so demonstrates their potential for significant future growth.
These businesses have significantly increased their gross profit and margin due to their noteworthy improvements in operational efficiency. Similarly, they have deliberately increased service revenue, primarily through installations, laying the groundwork for higher-margin subscription income in the future. One of these businesses is progressing with clinical studies and reaching regulatory milestones thanks to significant funding.
Moreover, the research focuses on these companies’ recent financial performance and strategic actions, shedding light on the reasons behind their outstanding return potential. Identifying and seizing these chances in an unfavorable macro environment is crucial since investing in these stocks allows you to take advantage of their growth potential and diversifies your investment approach.
Energy Services of America (ESOA)
Energy Services of America (NASDAQ:ESOA) is a leader in providing construction and maintenance services in the energy sector. The company had a solid gross profit and margin boost relative to top-line growth. In Q2 fiscal 2024, the gross profit was $6.2 million, up from $3.9 million in Q2 2023. Thus, the 60% boom in gross profit signifies sharp cost control and operational edge.
Additionally, the gross margin increased from 7.3% to 8.8%. This increase in gross margin signifies that the business is becoming more adept at turning sales into real profit and uplifting the top line. A sharp sales mix across all business lines led to improved gross profit. Additionally, Energy Services of America has improved its financial performance. Compared to a net loss of $1.9 million in Q2 fiscal 2023, the net loss for Q2 fiscal 2024 was $1.1 million.
In sum, attaining considerable improvements in gross profit and margin makes Energy Services of America a top pick among undervalued stocks to buy.
Creative Realities (CREX)
Creative Realities (NASDAQ:CREX) engages in digital marketing technology solutions. These include installations and SaaS services. The company had a boost in gross profit from $5.1 million in Q1 2023 to $5.8 million in Q1 2024. This indicates a rise in the bottom line. A strategic shift in the revenue mix led to a decline in the gross margin percentage, falling from 51.2% to 46.9%. Additionally, the company’s service top-line increased by a massive 45%, especially in installations. These installations are vital because they bring in higher-margin subscription income down the road.
Moreover, annual recurring revenue (ARR) increased from $16.3 million at the end of 2023 to an all-time high of $17.7 million as of Q1 2024. This $1.4 million rise in ARR demonstrates that customers’ dependence on creative realities’ technological solutions is expanding. Additionally, the business reiterated its projection to reach an ARR of $20 million by the end of 2024, demonstrating its strong belief in ongoing expansion and client retention.
Overall, Creative Realities’s strategic lead toward the bottom line and service revenue supports its presence on the undervalued stocks to buy list.
Outlook Therapeutics (OTLK)
Outlook Therapeutics (NASDAQ:OTLK) operates a biopharmaceutical company that develops and commercializes treatments. The company is in solid financial standing. The company recently closed a private placement that raised $172 million. This includes $65 million received in cash from the sale of common stock and warrants. With that, there is an additional potential of $107 million contingent on the full exercise of these warrants. This accessible capital is expected to fund the company through critical milestones. Hence, these include the potential approval and commercial launch in parts of Europe, the completion of the NORSE EIGHT study, and the subsequent US launch.
Further, the company is collaborating with Cencora (NYSE:COR) to leverage its infrastructure for the EU launch of ONS-5010. The company plans to commercialize ONS-5010 directly in the US. Meanwhile, it evaluates direct and partnered commercialization strategies in Europe and other regions. ONS-5010 is expected to receive ten years of market exclusivity in the EU if approved.
To conclude, Outlook Therapeutics’s high potential involves achieving regulatory approval and progressive product launches, making it a top pick among undervalued stocks to buy.
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.