Arlo Technologies (ARLO)

They reported last month: a modest revenue beat though product sales were -25% YOY due to lower average selling prices in the security industry; but subscribers were up 51% YOY and subs enjoy higher margins which helped achieve record free cash flow. EPS also beat. Average revenue per user was up 15% YOY. Was no waker demand during the first 4 weeks of the tariff war. Earnings expected to grow 55% this year, but sells at only 27x PE vs. peers at lower PE but also much slower growth. It's run up a lot, so buy only a little now.

They make home security hardware, using an app to control your security service. Yes, Apple has stuff, but Arlo's stuff is solid. In recent years, they're pushing hard into services, including for business clients. Arlo is down 23% YTD. It was spun off from Netgear in 2019 and soon tanked from strong competition, dour outlook and other factors. One big risk was one shareholder owning the lion's share. Pivoting to services last year was a good move, though and now boast a 50% conversion rate to pick up customers (from a trial basis). Losses are shrinking and their quarterly reports are certainly improving. Strong Q1 results, though they were a victim of the spring rotation play. Though margins have improved, it's still losing money. But at $6/share now, this is ridiculously cheap. Carries no debt and trading at 1.2x sales. Could be a takeover target.