Diving into the investing world often feels like a treasure hunt. Among these treasures are promising sleeper stocks, those undervalued gems that have failed to attract mass investor attention despite their strong fundamentals and compelling business models. While the buzz typically centers on high-flying stocks making daily headlines, many of these lesser-known equities quietly promise attractive returns.
And if you dig a little deeper, it’s evident that some sleeper stocks boast more reasonable valuations and present stronger financials than their celebrated counterparts. These stocks linger in the shadows today, but soon enough, they could potentially become multi-baggers. After all, isn’t it often the quiet ones that surprise the most for investors?
ePlus (PLUS)
In the bustling realm of software-as-a-service (SaaS) solution providers, ePlus (NASDAQ:PLUS) has carved a distinguished reputation, impressively securing a coveted spot on CRN’s 2023 industry leader list. Moreover, to further bolster its offerings, ePlus launched a cutting-edge threat detection response service. Layer that up with its specialized consultants, and consumers of its managed detection and response services are in for an incomparable experience.
Financially, ePlus stands on solid ground. It posted a stellar $574.1 million in sales for the second quarter, which didn’t just meet expectations but blew past it by a whopping $78.4 million, underpinned by a healthy 8.4% EBITDA margin. Moreover, thanks to its partnerships with Dresner Partners, ePlus added Network Systems to its arsenal, supercharging its high-capacity network capabilities. It has also inked a deal with Palo Alto Networks (NASDAQ:PANW) with synergies promising operational efficiency and an enhanced security service portfolio.
Perion (PERI)
In the dynamic ad tech world, Perion (NASDAQ:PERI) stands out for its impressive double-digit revenue and earnings growth and its attractive valuation. Serving as a nexus between search, social media and display advertising, including the increasingly popular video and CTV ads, Perion is in an excellent position to continue dominating the digital advertising realm. With CTV ad revenues doubling year-over-year, its second-quarter sales leapt an astonishing 22% year-over-year, a trend mirrored by the 45% year-to-date surge in EBITDA.
While the 10% year-over-year growth in GAAP net income may not match the dizzying heights of previous quarters, it’s worth noting that Perion is still delivering double-digit profit margins. Underpinning this financial prowess, the company boasts a robust safety net, with a cushion of $185.9 million in cash and cash equivalents, underlining its stable fiscal foundation and prospects.
Alibaba (BABA)
Chinese tech titan Alibaba (NYSE:BABA) is renowned for its sprawling eCommerce, retail and cutting-edge technology empire. Reflecting on the firm’s vast diversification, a major reorganization is underway, streamlining its business operations into six specialized groups. This strategic move is designed to prevent one division’s setbacks from spreading and allow each segment to flourish independently.
Recent financial highlights validate Alibaba’s robust operational strategy. Shares soared by over 6.5% following its impressive first-quarter results, outpacing market expectations. Its non-GAAP earnings leaped by a staggering 48% year-over-year, with revenues witnessing a 14% bump from the prior-year period. A special nod goes to its Cloud Intelligence revenue, rooted in developing advanced AI models, which saw a 4% spike. Alibaba Cloud, the cornerstone of its digital ecosystem, delivers remarkable quarterly sales and EBITDA growth. Additionally, with Tongyi Qianwen, Alibaba’s commitment to pioneering the AI landscape is crystal clear. Hence, BABA stock remains one of the best bets at the resurgent Chinese market at this current juncture.
On the date of publication, Muslim Farooque 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