8 Best Conglomerate Stocks to Buy Now

5) RCM Technologies, Inc. (NASDAQ:RCMT)

Average Upside Potential: 77.21%

RCM Technologies, Inc. (NASDAQ:RCMT) is the provider of business and technology solutions which are designed to enhance and maximize operational performance of its customers.

The company posted strong top-line growth, maintaining its legacy. Top line went up by 7.2% YoY to $71.9 million for 1Q 2024. This growth stemmed from strong performances throughout its segments, mainly in engineering, where gross profit increased 27.1%. This strong growth in the engineering segment exhibits effective project execution and higher-margin contracts. Collectively, these developments led to overall revenue expansion.

Coming to profitability, the company’s adjusted EBITDA increased 11.1% annually to $6.8 million in 1Q 2024, with adjusted diluted EPS increasing 30.4% to $0.53 per share. These were supported by its sharp cost controls which might lead to sustained growth momentum. RCM Technologies, Inc. (NASDAQ:RCMT) is focused on expanding its market footprint, mainly in the K–12 education sector. It saw 19.1% revenue growth in school districts served, exhibiting successful onboarding of new clients.

Analysts at Benchmark initiated a coverage on the shares of RCM Technologies, Inc. (NASDAQ:RCMT) and gave a “Buy” rating. They gave a price objective of $33.00 in a research report dated 15^th May.

It seems that the stock of RCM Technologies, Inc. (NASDAQ:RCMT) is currently undervalued as it trades at ~12.80x of NTM earnings, which is at a deep discount to the sectoral average of ~18.9x. The company is likely to benefit from its cash conversion, that increased both sequentially and YoY in 1Q 2024. It should continue to see improvement in cash flow from operations in each of the upcoming 2 quarters.

In the first quarter of 2024, RCM Technologies, Inc. (NASDAQ:RCMT) was included in the portfolios of  11 hedge funds, with a total stake value of ~$19.9 million.