10 Oversold Small Cap Stocks to Buy Right Now

3) LegalZoom.com, Inc. (NASDAQ:LZ)

Market Cap (As of October 22): $1.21 billion

Forward P/E (As of October 22): 12.28x

% Decline on a YTD Basis: ~37%

Number of Hedge Fund Holders: 26

LegalZoom.com, Inc. (NASDAQ:LZ) operates an online platform, supporting the legal, compliance, and business management needs of small businesses and consumers in the US.

LegalZoom.com, Inc. (NASDAQ:LZ) has been undertaking a strategic review of its go-to-market and product strategies. It continues to focus on subscription-oriented offerings. This move can potentially improve revenue visibility and customer retention. The company rolled out a new mobile experience, which demonstrated promising early results. Moreover, LegalZoom.com, Inc. (NASDAQ:LZ) has been exploring new advertising strategies that are focused on affordability instead of free services, hinting at a potential shift away from the freemium model.

The company plans to increase its brand investments, which include a partnership with the NBA. Such marketing initiatives should fuel its topline trends in H2 2024 as LegalZoom.com, Inc. (NASDAQ:LZ) targets to reinforce its brand presence and onboard new customers. Its emphasis on improving post-formation sales motion might result in higher retention rates and increased revenue per customer. By using initial touchpoints with entrepreneurs, LegalZoom.com, Inc. (NASDAQ:LZ) can be an integral part of a business’s growth journey, providing legal and compliance services as and when these companies expand.

Moving forward, the company’s brand recognition and established market presence are expected to act as potential tailwinds. As more businesses and individuals focus on digital solutions for legal needs, LegalZoom.com, Inc. (NASDAQ:LZ)’s platform and expertise should drive sustained growth over the long term.

Jefferies Financial Group upgraded the shares of LegalZoom.com, Inc. (NASDAQ:LZ) from a “Hold” rating to a “Buy” rating, setting a $8.00 price target on 31^st July. Meridian Funds, managed by ArrowMark Partners, released a second quarter 2024 investor letter. Here is what the fund said:

“LegalZoom.com, Inc. (NASDAQ:LZ) is a leading online platform providing small businesses with legal, compliance, and tax services that allow them to start and operate within the required regulations. The stock underperformed during Q2 on weak guidance from management that indicated its small businesses, the company’s core customers, were under pressure. We believe that the company will continue to gain share due to its strong brand and network effects which will allow them to sell a broad range of services to small businesses. We also see room for significant operating leverage as the expanded range of products and services begins to generate revenue after several years of investment. We added to our position during the period on share price weakness.”