In the stock market, the allure of small-cap stocks often lies in their untapped potential and the promise of substantial returns. Three small-cap stocks stand out as captivating players ready to skyrocket by 2025 in the intricate web of financial opportunities.
Here, the first has strategically pivoted its focus, shedding legacy businesses and streamlining operations to serve the underbanked and underserved populations. On the other hand, the second one has secured significant contracts in the healthcare sector, emphasizing financial prudence without compromising growth. Meanwhile, the third on the list showcases operational prowess, fostering a thriving marketplace with escalating buyer interest and robust seller diversification.
Read more to learn about the potential of these small-cap stocks, dissecting their strategic decisions, financial acumen, and operational triumphs. Explore what set the stage for their progress towards soaring returns.
SurgePays (NASDAQ:SURG) has made vital strategic decisions, including shelving legacy businesses like LogicsIQ. The decision to streamline messaging and focus on core models reflects a clear understanding of the importance of defining the company’s story and market strategy for future leads.
The decision to wind down LogicsIQ, despite contributing $4.1 million to top-line sales in Q3 2022, demonstrates an effort to attain long-term goals. By aligning the company’s strategic moves with a significant attainable edge on value, SurgePays ensures its focus remains on serving the underbanked and underserved populations.
Another strategic long-term profit approach is evident in the transition focus from outdoor pop-up tent sales to convenience stores for Affordable Connectivity Program (ACP) sign-ups. While this shift may have slowed down subscriber growth in the short term, the economics of a store base versus a tent sales model make it the right move. Scaling the national footprint of stores transacting on SurgePays’ network and growing roots in these communities presents a significant top-line growth opportunity (organically and through potential acquisitions).
Fundamentally, more stores on the platform translate to more ACP sign-ups, products and services, transactions and ultimately more revenue for SurgePays. The model to acquire ACP subscribers at stores has worked well, and the company’s capability to adapt and refine strategies based on performance metrics signals an agile and responsive approach.
Finally, customer-facing point-of-sale equipment is introduced, specifically LCD screens at registers. Partnering with ClearLine Mobile to test customer-facing LCD screens at the register is another strategic move beyond addressing operational challenges. Therefore, the company may reach solid ground for customer engagement, marketing, and revenue generation with these moves.
Spok (NASDAQ:SPOK) has operational leads, particularly in securing significant customer contracts within the healthcare sector. There is the acquisition of multi-year engagement contracts with prominent healthcare systems. These include nonprofit integrated academic healthcare systems, academic teaching hospitals, and comprehensive cancer centers. Hence, this demonstrates Spok’s fundamental capability to capitalize on the demand of healthcare institutions.
In this direction, 11 new six-figure customer contracts are announced, and one seven-figure contract in Q3 2023, highlighting the company’s ability to attract and retain valuable clients. Also, software operations bookings have exceeded $26 million on a year-to-date basis. It is up more than 38% year-over-year, indicating sustained growth momentum. Including value-added services, such as data integrity, workflow analysis, and organizational change management, in customer contracts underlines Spok’s focus on delivering comprehensive solutions.
On the other hand, a notable reduction of nearly 12% in adjusted operating expense levels in Q1–Q3 2023 signifies Spok’s focus on financial prudence. This reduction is achieved without compromising the necessary investments (in product development, sales, marketing, and customer support). Also, there is an early termination of the lease on the corporate headquarters in Alexandria, Virginia. This is a strategic move with both immediate and long-term benefits. Though incurred upfront, the one-time termination fee of $0.7 million is a calculated investment. It is expected to result in approximately $1 million in annual savings starting in September 2024.
As a result, Spok’s financials are marked by progressive metrics and may continue to improve. In Q3, there was a GAAP net income of $4.5 million, representing a significant 52% year-over-year increase. In the same direction, there are consistent payouts of dividends totaling approximately $25 million in 2023. Therefore, this aligns with the company’s inclination towards return value to stockholders. Historically, Spok has returned approximately $44 million to its stockholders in 20 months (Q3).
GigaCloud (NASDAQ:GCT) has made operational progress that suggests potential value growth. For instance, in Q3 2023, the marketplace’s gross merchandise value (GMV) grew approximately 41% year-over-year in the trailing 12 months (TTM). This reflects the appeal and effectiveness of GigaCloud’s supplier-fulfilled retailing model, indicating progressive demand within the marketplace. This growth results from the marketplace’s capability to attract buyers and sellers. Hence, the company creates an ecosystem with high-quality products and a diverse customer base.
Additionally, the continued focus on third-party (3P) seller marketplace GMV growth is a strategic move by GigaCloud. This segment has an approximate 67% year-over-year increase in TTM. This growth accounts for 54% of the total marketplace GMV. Thus, this suggests the vitality of diversifying the seller ecosystem within the platform. Also, the acceleration in the 3P seller marketplace GMV indicates positive momentum in the organic growth of GigaCloud’s business.
Fundamentally, the company has an edge in quickly vetting and onboarding new third-party sellers. This aligns with the scalability of the supplier-fulfilled retailing model. Acquisitions like Noble House contribute a significant number of sellers. Hence, the 3P seller marketplace is expected to scale GigaCloud’s business.
On the buyer side, GigaCloud has seen active buyers increase to 4,602 in TTM. This represents a 10% increase year-over-year (as of Q3 2023). The average spend per active buyer has experienced a solid 28.5% year-over-year jump, reaching approximately $149K. Thus, these metrics highlight the platform’s lead in attracting and retaining high-quality, high-volume buyers.
Finally, the increase in active, high-volume buyers indicates an expanding user base and growing interest in GigaCloud’s marketplace. Meanwhile, the substantial growth in the average spend per active buyer further emphasizes the platform’s capability to capitalize on demand from buyers with significant purchasing power. If you are looking for small-cap stocks, start here.
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.