13 Best Technology Penny Stocks to Buy Right Now

11. Clarivate (NYSE:CLVT)

Share Price as of March 28: $4.09

Number of Hedge Fund Holders: 20

Clarivate (NYSE:CLVT) provides information services and operates through three segments: Academia & Government, Life Sciences & Healthcare, and Intellectual Property. It provides scientific & academic research, solutions, and expertise for research institutions. Its platform allows companies to secure, manage, and protect their IP assets. It also assists decisions regarding drug development lifecycles.

The company has a focus on its recurring revenue stream, particularly its subscription-based offerings. In Q4 2024, subscriptions grew by ~1%, although the recurring revenues were flat. The company’s Value Creation Plan (VCP) has been designed to improve the predictability of subscription and recurring sales. The end goal is to increase the recurring revenue mix from 80% to 87% in 2025, which will mark a 5% year-over-year rise.

To make this happen, the company transitioned its ProQuest ebooks and digital collections in the Academia and Government segment to a subscription-only model. The aim is to make 90% of this segment subscription-based. In Life Sciences as well, the company launched a subscription-based real-world data analytics product. Clarivate (NYSE:CLVT) is also investing in AI-driven solutions to further enhance the subscription offerings.

Cove Street Capital Small Cap Value Fund added a position earlier last year in the company due to its ability to provide aggregated solutions to customers. The fund stated the following regarding Clarivate Plc (NYSE:CLVT) in its Q2 2024 investor letter:

“We also added a position in Clarivate Plc (NYSE:CLVT), a data services provider that operates across academic research, intellectual property, and life sciences. We came to the investment from cross-work in another holding, Research Solutions (ticker: RSSS). Ultimately this company sucks in data from participants in the industry, aggregates it, and provides value added services and tools back to those industry participants. The power is in providing customers access to the aggregate. This was a private equity roll-up of a bunch of different data assets that paid too little attention to product innovation, leading to a period of stagnating growth and repeatedly missing guidance. The business of selling many tools and services on a pile of fixed cost assets (data) remains tremendous as can be seen by Clarivate’s mid-to-high 30% EBITDA margins and strong returns on invested capital. With new management and board members in place and 18 months of an “investment cycle” under their belt, we view the risk/reward of CLVT to be favorable at these levels, with a strong upside case if they can reinvigorate growth to their target levels.”