Some of the stocks in the microcap sector that are under accumulation are big players in their respective business spaces. One such company is SelectQuote Inc. (SLQT), suggests Bryan Perry, editor of Micro-Cap Trader.
SelectQuote pioneered the model of providing unbiased comparisons from multiple, highly-rated insurance companies, allowing consumers to choose the policy and terms that best meet their unique needs.
Two foundational pillars underpin SelectQuote’s success: a strong force of highly trained and skilled agents who provide a consultative needs analysis for every consumer, and proprietary technology that sources and routes high-quality leads. You’ve probably seen its nationwide TV advertisements that are a key driver to branding the company’s one-stop-shop solution.
The company suffered greatly during the pandemic, as customer churn and shortage of agents hampered growth, leading to losses and a loss of investor confidence. Much has changed in the past year, and the business is expected to grow revenues this year by 23% to $940 million and return to profitability.
In the latest quarterly report, Q2 generally accepted accounting principles (GAAP) EPS of $0.14 beat estimates by $0.13, and revenue of $319.2 million (+63.7% Y/Y) beat estimates by $19 million. The online insurance marketplace also revised its revenue and earnings guidance upward, which boosted investor confidence, and announced the placement of a new CFO.
Insurance stocks stand to do well in the current environment, as they will not only benefit from price increases, but their investment income should be higher due to elevated interest rates.
SelectQuote increased its revenue and earnings guidance at the midpoint of its fiscal year with revenue projections of $910 to $960 million, up from $850 to $950 million. In addition, the adjusted EBITDA projection was hiked to a range of $5 to $25 million, up from a range of negative $20 to $10 million.
A lot of good news all at once got the stock to pop higher on over 40 million shares traded, with the stock showing bullish money flows since the Feb. 7 earnings release. There is literally no technical resistance going up to $7. Being this is a strong turnaround story in the making, let’s put it to work.