In the current stock market, companies poised for a notable turnaround frequently present prospects for profitable investments. This is a fascinating story of three undervalued comeback stocks offering unique investment potential. Like high-yield assets, these businesses show encouraging signals of growth and recovery despite confronting their unique set of obstacles.
To start, the first one is poised for greater profitability and market dominance due to the strong revenue growth in its divisions, driven by the expansion of cross-border fulfillment solutions. Next, the second one’s increase in active customers highlights effective user acquisition and retention tactics and points to a promising future for market expansion.
Finally, the third one’s outstanding metrics for member and product growth demonstrate its capacity to draw in and keep clients for various financial products, establishing it as a major force in the fintech sector. Thus, the third company’s robust capital ratio and good financial stability support growth.
These factors not only provide confidence but also lay a robust platform for expansion ambitions. The companies’ competitive advantages further bolster this confidence, making their growth potential even more promising.
Comeback Stocks: Alibaba (BABA)
Expanding cross-border fulfillment solutions is the primary driver of Alibaba’s (NYSE:BABA) Cainiao division’s notable revenue growth. Strong demand and adoption are reflected in the 24% revenue growth year-over-year (YOY), mainly attributable to the revenue from cross-border logistics services.
Additionally, Cainiao’s enhanced cost efficiency and rising revenue are represented in a positive adjusted EBITDA instead of a loss in the prior year. The positive adjusted EBITDA shows that the increased profitability and financial performance can be attributed to effective cost-control methods.
Moreover, Ele.me’s stellar lead and Amap’s explosive growth drive Local Services Group’s robust revenue growth. The Local Services Group is generating substantial money based on its robust expansion. The Local Services Group performs better overall because Ele.me’s enhanced unit economics and growing scale led to fewer losses in Alibaba’s home operations.
Finally, the Alibaba International Digital Commerce Group (AIDC) has seen a 44% YOY increase in international digital commerce sales, which suggests that Alibaba’s global digital commerce operation has grown significantly.
JD (JD)
JD (NASDAQ:JD) had a spike in the number of active users in Q42023, suggesting consistent expansion in its user base. The acceleration suggests that user acquisition or retention activities have significantly increased. This increase implies that JD’s client acquisition and retention methods are working. Based on that, JD might continue to offer growth in active consumers over the long term.
Furthermore, users’ shopping frequency on JD increased in Q4 and for the entire year. The rise in devoted current users and Plus members is responsible for increased shopping frequency. Hence, the stronger order volume grew from improved user engagement, reaching double-digit YOY growth in Q4 and accelerated for three straight quarters.
Finally, JD Plus’s membership base continued to increase rapidly in Q4. With that, Plus members’ Gross Merchandise Value (GMV) contributed quicker than the overall GMV. This demonstrates the appeal and utility of a JD Plus subscription. Therefore, net Promoter Scores (NPS) for 1P and 3P firms significantly improved in Q4 due to customer experience enhancement initiatives such as free delivery, rapid refunds, and best price guarantees.
SoFi (SOFI)
Last on the list of comeback stocks to buy is SoFi (NASDAQ:SOFI). SoFi’s member and product growth indicators demonstrate the company’s capacity to draw in and hold onto consumers, a considerable pattern propelling its growth. In Q12024, SoFi’s membership base grew rapidly, with 8.1 million users, a 44% YOY increase.
Furthermore, throughout the quarter, the firm signed up 622,000 new subscribers. Indeed, the solid surge in membership attests to SoFi’s robust brand attractiveness, successful marketing approaches, and capacity to draw clients across its range of product offerings.
Moreover, members’ product adoption showed a robust increase, with 989,000 new products added in Q1. Ninety-three percent of these new product additions were in the Financial Services category, suggesting that cross-selling and user interaction are rising on the platform. The solid increase in new product offerings indicates SoFi’s ability to successfully monetize its membership base by offering various financial services and products. Thus, with a total capital ratio of 17.3%, SoFi has high financial stability and capital sufficiency.
Overall, the notable increase in customer deposits indicates that the firm is becoming less dependent on pricey outside funding sources, improving its capital position and flexibility.
As of this writing, Yiannis Zourmpanos held long positions in BABA, JD and SOFI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.