Established, growing-revenue companies whose losses are shrinking toward zero. The market screens them out right at the turn — so they sit under-covered, exactly when it matters most.
We look for businesses with real, steadily growing revenue that are still losing money — but whose operating losses are narrowing toward breakeven, or have just crossed into the black. That transition, from negative to positive, is the whole game.
It's sector-agnostic: a ramping commercial-stage company counts as much as a software name. What matters is the shape — revenue up, losses shrinking — not the industry.
Most screens demand every metric be positive. A company still posting a loss has no P/E to rank on, so it falls out of the filters everyone runs — and stays under-followed.
Our edge is to look precisely there: at the names the common scans discard, right as the loss-to-profit inflection is underway and before the market has re-rated them.
Five9 is the picture of the thesis: revenue growing healthily, year after year, while the operating and bottom line — once firmly negative — climb steadily toward zero and beyond. The business was always working; the profitability just hadn't caught up yet. That gap, between a proven top line and a not-yet-positive bottom line, is where we hunt.
The discipline is to spend cheap effort before expensive effort. A wide, near-free pass narrows the field; only the survivors earn the deep, costly analysis.
A coarse screen for established companies sitting just below profitability. It's deliberately broad — it surfaces candidates, nothing more.
For each candidate we check the actual trend — is the loss really shrinking, on top of revenue that\'s still growing? This is the cull that turns a noisy list into real inflection plays.
The handful that survive run through our full multi-step research pipeline, and a person makes the final call. Expensive work, reserved for names that have already earned it.
A stock screener sees a single snapshot — it can't see a trend. So a snapshot can only ever hand us candidates. The real work is adding the time dimension: is the loss actually shrinking, quarter over quarter, on top of revenue that's still growing?
A company losing money has no P/E and no P/FCF — which is exactly why generic screens skip it. We value it on EV/Sales, EV/EBITDA, EV/Gross Profit and a reverse-DCF instead. The metric that breaks the crowd's screen is the one that hides the opportunity.
The trap is the pre-revenue mirage: a company with a sliver of sales against a huge loss can look "one quarter from breakeven" simply because revenue ticked up. We require established, growing revenue — a business that already works and is turning the corner, never a pre-revenue narrative.
A name that just turned operating-profitable — margin barely positive, revenue still climbing — is the inflection completing. Often the market hasn't re-rated it yet. That lag is the entry.