Consider On Holdings (ONON) and Duolingo (DUOL), as both stocks are flat from recent years despite their revenues growing by 3x and 4x respectively, creating a potential valuation disconnect. For a contrarian rebound play, look at The Trade Desk (TTD), which has fallen 75% on what may be exaggerated competition fears while its fundamentals remain strong. As a higher-risk but deeply undervalued option, Gambling.com Group (GAMB) is down 65% and provides direct exposure to the mega-trend of legalized online gambling. These companies are presented as high-conviction opportunities where strong business growth is not yet reflected in the stock price. Each company also demonstrates high profitability and growth, meeting the Rule of 40.

On Holdings (ONON)

• The speaker highlights a significant disconnect between the company's performance and its stock price. While the stock price has been flat for nearly four years, trading around $45, its revenue has more than tripled to $3.6 billion in the same period.
• The company is described as a high-growth, high-margin business that is successfully taking market share.
  • CEO Guidance: 34% year-over-year growth, 62.5% gross margin, and 18% adjusted EBITDA.
  • The company achieves the Rule of 40 (a key metric for SaaS and growth companies where Growth Rate + Profit Margin > 40%), with a score of 45.
• On is positioned as the new "in" brand for athletic footwear, taking the "athletic flair from Nike (NKE)." The shoes are seen as a status symbol, similar to the "Lululemon of shoes."
• A key strength is its high percentage of Direct-to-Consumer (DTC) sales through its own stores and website, giving it higher margins and more brand control.
• The company has been buying back shares and has managed share dilution very well.
• A future growth catalyst is the expansion into new product categories like apparel (shirts, activewear).

Takeaways

• Bullish Sentiment: The speaker is very bullish, calling the stock "dirt cheap" due to its strong fundamental growth not being reflected in its stock price.
• Valuation Play: The core investment thesis is that the market has overlooked On Holdings, creating a valuation opportunity. An investor is buying a company that is 3.5x larger than it was four years ago for the same stock price.
• Growth & Brand Strength: The company is considered a leader in the premium athletic wear space with strong brand momentum and high profitability. The expansion into apparel provides an additional avenue for future growth.

The Trade Desk (TTD)

• The stock has experienced a major decline, down approximately 75% over the past 12 months.
• The primary reason for the drop is market fear over increased competition from tech giants Amazon (AMZN) and Google (GOOGL) in the digital advertising space. The speaker believes this fear is "always over-exaggerated."
• The Trade Desk's key competitive advantage is its position as the leading neutral demand-side platform (DSP), allowing ad buyers to purchase ads across a wide range of channels without being tied to a specific ecosystem like Google's or Amazon's.
• The company is founder-led and has a strong history of outperforming the market prior to the recent drop.
• Two major growth catalysts were identified:
  • Connected TV (CTV): Advertising on CTV is a rapidly growing and highly profitable market, and TTD is a key platform for selling these ad slots.
  • International Expansion: While strong in the U.S., the company has a massive opportunity to grow its presence globally.
• Despite the price drop, the company's fundamentals remain strong, achieving a Rule of 40 score of 42. Share dilution is minimal.

Takeaways

• Bullish / Contrarian Sentiment: The speaker sees the massive stock price drop as a buying opportunity driven by what they believe is excessive market fear.
• Rebound Potential: The stock is presented as an interesting play for both long-term investors who believe in the "neutral platform" thesis and for short-to-medium-term investors looking to capitalize on a potential rebound from oversold levels.
• Bet on Neutrality: An investment in TTD is a bet that in the vast digital advertising world, there will always be a significant need for an independent, unbiased platform, even with competition from giants like Amazon.

Gambling.com Group (GAMB)

• This stock is presented as potentially the "riskiest" of the group but also "so dirt cheap." It is down 65% year-to-date.
• The sell-off was attributed to the AI narrative—the fear that users will ask AI for gambling recommendations instead of using affiliate websites. The speaker views this as a "major misunderstanding" of the business model.
• The company is described as the "Expedia of gambling sites," operating as a referral and data business in the highly regulated online gambling space. It runs numerous websites, including Gambling.com, Casinos.com, and Vegas.com.
• Its business is diversified across three main streams:
  • Performance Marketing: Earning commissions from referring players to gambling sites (largest segment).
  • Subscription Services: Selling odds and market data to both gambling companies and consumers.
  • Advertising: Selling ad space on its portfolio of websites.
• A key moat is the complex regulatory environment. The company's large portfolio of state- and country-specific websites is difficult to replicate and provides a barrier to disruption.
• Catalysts for growth include:
  • The mega-trend of gambling legalization across more U.S. states.
  • The potential rise of prediction markets, which would increase demand for its data subscription services.
  • A potential stock price "pop" from a favorable settlement of an inherited lawsuit.

Takeaways

• High-Risk, High-Reward Bullish Sentiment: The speaker is bullish, arguing that the extreme pessimism around AI has created a compelling valuation. The stock is trading at just 1.3x forward revenue and 5-6x TTM EBITDA.
• Deep Value / Misunderstood Business: The investment thesis is that the market misunderstands the company's durable advantage in a regulated industry and has overly discounted it. The speaker suggests the risk of AI disruption is already more than priced in.
• Industry Growth Play: An investment in GAMB is a way to gain exposure to the broad, long-term growth of legalized online gambling in the U.S. and globally.

Duolingo (DUOL)

• Similar to On Holdings, Duolingo's stock price is flat compared to its 2021 levels, yet its revenue has quadrupled (4x) from $250 million to nearly $1 billion during that time. The speaker calls this disconnect a sign that the "market is nuts."
• The company is considered cheap based on its growth, with an EV/GP/RG of 0.25 and a Rule of 40 score of 47.
• The speaker argues that investors in Western countries misunderstand Duolingo's true value proposition. While it may seem like a hobbyist app for learning a second language in the U.S., it is an essential tool in non-English speaking countries where learning English is critical for economic opportunity.
• The app's "highly addictive," gamified nature is a key strength, driving user engagement and retention. Its marketing is particularly effective in Asian markets.
• Duolingo is actively disrupting the education market with products like the Duolingo English Test, which is gaining ground on traditional, more expensive tests like the TOEFL.
• A potential area for massive future growth would be expanding its platform beyond languages to other subjects like math, science, and history, turning it into a true global disruptor of primary education.

Takeaways

• Bullish Sentiment: The speaker is "warming up to" the stock, viewing its current price as an attractive entry point given its explosive revenue growth.
• Global Education Play: The investment thesis is that DUOL is not just a game but a powerful and essential educational tool with a massive addressable market in emerging economies.
• Untapped Potential: While the core language business is strong, the long-term bull case rests on the company's ability to leverage its addictive platform to teach other subjects, which would dramatically expand its market and potential valuation.