Good morning,
I'm just wondering whether these are perhaps 2 interesting small cap turnaround candidates.
Above all, I don't find them uninteresting $SNAP (-2,25%) not. In my son's generation, I've noticed more and more recently that Snapchat has matured into a popular alternative to WhatsApp. This is because messages and pictures are deleted immediately after being opened once if you don't save them, which the sender then notices.
With $MLCO (-2,75%) I'm not quite sure yet. But gambling stocks generally have high upside and downside potential.
1. (0|Snap}} - Social media platform with strong AI potential
- Current price: $7.60
- Estimated fair value: USD 11.27 (upside potential +48.2%)
- Market capitalization: USD 12.8 billion
Snap (NYSE:SNAP)Snapchat, the parent company of Snapchat, has suffered from the volatility of the advertising market and intense competition from TikTok and Meta. As a result, the share fell to an all-time low of USD 7.60 - a drop of more than 90% from its 2021 high.
Source: Investing.com
However, this pronounced pessimism fails to recognize the company's strong user growth and innovative monetization strategies. With 414 million daily active users - up 10% year-over-year - and a 42% increase in Snapchat+ subscriptions, Snap is increasingly succeeding in tapping into stable, recurring revenue streams beyond its volatile advertising revenue.
The analysts' average price target is USD 11.27, implying an upside potential of 48.2%. In addition, ad tools optimized by machine learning have improved conversion rates for app install campaigns by 30%.
Source: InvestingPro
With an expected price/earnings ratio of just three times - around half the industry average in the technology sector - SNAP appears undervalued by 8 to 60% according to DCF models. If the advertising market recovers by 2026, the share price is likely to rise above the USD 10 mark again and provide patient investors with price gains of over 50%.
2 Melco Resorts & Entertainment - Revival in the gambling paradise of Macau
- Current price: USD 8.19
- Estimated fair value: USD 11.56 (upside potential +41.2%)
- Market capitalization: USD 3.2 billion
Melco, an operator of luxury casinos in Macau and the Philippines, is currently in a performance deadlock with a share price of USD 8.19. The main reasons for this are the strict regulations. The main reasons for this are the strict regulations in the gaming sector and the slowdown in the tourism sector following the pandemic. However, there are now signs of a significant economic recovery in China, which is releasing the pent-up demand for leisure and entertainment offerings - particularly in the gaming sector.
Source: Investing.com
With a price-earnings ratio (P/E) of 0.83 compared to the sector value of 1.4, the company has clear value potential. Melco Resorts & Entertainment (NASDAQ:MLCO) a clear value potential. The price target of USD 11.56, based on the fair value of InvestingPro Fair, only scratches the surface of the actual potential. Positive analyst comments and upgrades - including from Goldman Sachs and JPMorgan - highlight the robust EBITDA margins and confirm the "buy" rating.
Source: InvestingPro
In addition, the ongoing debt reduction and the modernization of RFID technology should further increase efficiency. In combination with a normalization of visitor numbers, this could lead to sales growth of 20 to 30 %. Based on traditional valuation metrics, MLCO remains clearly undervalued and is excellently positioned to benefit from a renewed upswing in the tourism sector - a return above the USD 10 mark by mid-2026 appears realistic.
