The three companies discussed below are the ones that have experienced volatile and depressed stock prices in recent years. However, lately all three companies have managed to strengthen their financial performances and each has experienced significant stock price appreciation.
Groupon Inc (GRPN)
Groupon, an e-commerce platform that connects consumers and merchants, was founded in 2008. The company went public at a share price of $20 in November 2011. However, immediately following the IPO, the share price of Groupon plunged, hitting a bottom of $2.63 in November 2012. In the recent months, Groupon has been making solid progress, and things are turning positive. Currently, Groupon shares are trading at $8.53, and given its healthy performance, it is believed the share price has bottomed out. The company is expected to deliver healthy results in the future as it is the leading daily deal provider with a large active customers' base of approximately 40 million around the world. Also, Groupon has a potential to experience an impressive growth rates given the significant global advertisement market opportunities available. Among the other factors that can contribute to the company success are offering targeted deals (which will improve deal conversion) and growing its footprint in other markets like events and travel.
In the last quarter, Groupon was able to improve its take rate by 3.5% across the segments, and gross billings increased by 4% year on year basis. By registering quarterly revenue of $601 million, revenue beat of $11 million was also posted by Groupon. Groupon is likely to experience robust growth, and analysts are also anticipating a high growth rate of 22% per annum for next five years.
Pandora Media (P)
Pandora, internet radio services provider in the U.S, has experienced a volatile share price performance since its IPO in 2011, priced at $16 a share. Pandora marked a lowest share price of $7.18 in Nov. 2012, but now with a share price of $18.83, it seems things are rolling smoothly and it is on track to deliver healthy performance. Lagging only Google (GOOG) and Facebook (FB) in terms of monthly consumer usage, Pandora is the top internet properties in audience reach. The company has marked a considerable improvement in its ability to monetize growing mobile usage. A growing sales force, Triton measurement and radio buying platform integration create a good opportunity for Pandora to penetrate into the radio advertisement market. Growing listening hours from mobile and other distribution channels, improved sell-through rates and increasing paying subscribers are among the important catalysts that can drive stock price up for the company.
Pandora posted non GAAP revenue of $129 million for fiscal 1Q'13, better than analysts' consensus of $121 million. Marketing and sales, and product development spending were increased by the company in last quarter, and that will bode well for the company in the future. To achieve growth, Pandora has been growing its local footprint, as it has grown to 28 markets in total, with sales representative count reaching to 248. Analysts have an attractive growth projection of 45% per annum for Pandora.
Rite Aid Corp. (RAD)
With its subsidiaries, Rite Aid Corporation operates a chain of retail drug stores in the U.S. In the recent years, the company has undergone tough times, and as a result, the stock price of Rite Aid remained depressed. However, the stock price is up 97% year to date for Rite Aid. It seems that the worst is priced in, and the company is preparing for better financial results in the future. Last month, Rite Aid announced its 1Q'13 financial results which were better than 1Q'12. Rite Aid reported adjusted EBITDA $345 million, as compared to $295 million in 1Q'12, beating the analysts' consensus of $339 million. Better financial results for the quarter were mainly driven by cost control measures. As the company is committed to make its cost structure efficient further, which includes closing some of its stores, this will help the company to strengthen its financial performance in the future. Rite Aid's focus on 'wellness' seems to be beneficial for the company. By the end of its 1Q'13, the company remodeled approximately 20% of its stores to an improved 'wellness' format. Rite Aid has plans to convert another 292 stores to the 'wellness' format in 2013, which will bring positive results for the company.
The following chart shows stock price performances of the three companies.
Year to date
In last 1 year
Source: google finance
All three companies mentioned above have delivered strong financial performance and have experienced significant stock price appreciation recently. The stock prices for the companies seem to have bottomed out and are expected to deliver strong financial performance in the future. Groupon and Pandora operate in markets which offer huge growth prospects, and both the companies have long lasting business models. Rite Aid has been working to make its business operations more efficient and has delivered solid financial performance lately. Due to aforementioned factors, all three companies remain attractive investment options for the investors.