There are many ways to value a company. For an industry with only a few players, one key metric is market share. That’s because when there are just a few companies in an industry, it’s growth is largely over. So what matters most is being able to grow by getting consumers to switch.
In a slowing economy, companies focusing on growing their market share could be solid winners… and could also show investors which companies to avoid right now.
For instance, dating apps have slowed in popularity following a pandemic-era bump. But Bumble (BMBL) is faring well, with a growing market share at the expense of competitors.
Shares are down over a third in the past year. And sales haven’t fared as well as expected. However, revenues rose 17 percent in the past year. And the stock trades for a valuation of just $2.6 billion.
Action to take: Investors may like accumulating shares at current prices, as shares have shown a strong propensity to rally when the price gets near the current level of $20. Shares can likely see a mid-double-digit rally in the next few months.
For traders, the July $25 calls, last going for about $3.15, offer high-double-digit returns on a pop higher in the stock in the first half of the year.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any of the companies mentioned in this article.