We recently compiled a list of the 11 Best Fundamentally Strong Penny Stocks to Buy Now. In this article, we are going to take a look at where Vivid Seats Inc. (NASDAQ:SEAT) stands against the other fundamentally strong penny stocks.
Fundamentally strong penny stocks can represent highly attractive investment opportunities, primarily because they tend to be underfollowed companies operating outside the radar of most institutional investors and prominent sell-side analysts. Due to limited coverage, these stocks often remain hidden gems with significant untapped potential, making them ideal candidates for investors seeking outsized returns through diligent research and stock picking. Unlike speculative penny stocks, those supported by solid financial fundamentals – such as solid revenue growth, positive profitability, manageable debt levels, and robust performance even during economic slowdowns – indicate higher quality and reduced downside risk. Research consistently suggests that investing in undervalued, fundamentally strong small-cap or micro-cap (which are usually penny stocks) companies can generate superior long-term performance, largely because the market eventually recognizes and appropriately values their underlying quality.
READ ALSO: 12 Best Fundamental Stocks to Buy Now
While fundamentally strong penny stocks can offer compelling upside, exposure to them should be carefully timed, as their performance tends to be cyclical and highly sensitive to broader market sentiment. Historically, penny stocks have outperformed during periods of economic recovery, early bull markets, and risk-on environments. In contrast, during times of heightened volatility, tightening monetary policy, or flight-to-safety phases, these stocks often underperform due to their perceived risk and lower liquidity. That’s exactly what has been happening in the last 2 months since the inauguration of the new US administration – the small cap sector (as proxied by ETFs) has reached a new 5-year low on a relative basis vs. the broad market in March 2025 as the Trump 2.0 tariff turmoil has caused significant declines in valuations. Even the Federal Reserve Chair Jerome Powell recognizes the unstable outlook as he used the word “uncertainty” 16 times in his press conference last week.
As the reputable Yardeni Research boutique has put it,
“Markets continue to suggest that economic growth outside of the US is increasingly likely to improve while downside risks to US growth are rising.”
As a result, US stock valuation multiples are falling closer to their international counterparts. We believe this evolution has created opportunities for the most courageous investors willing to take a contrarian stance – the stock valuations suggest weakness, all while economic indicators reveal that the backbone of the US economy is still strong. For reference, the labor market remains strong, with no meaningful spike in jobless claims, which reinforces our belief that consumers remain strong. Likewise, business activity (as proxied by PMI) remained elevated in March, and employment surged. With a healthy consumer and industrial sector, the odds are that the upcoming months will not bring any meaningful economic slowdown, which is now becoming increasingly anticipated by analysts.
With that being said, the key takeaway for readers is that small caps, and particularly penny stocks, could become favored again, as the new batch of economic indicators suggests a strong economy going forward. Moreover, the recent 10% correction in the US stock market valuations offers more affordable opportunities to seek entry points. In this context, we believe that fundamentally strong penny stocks should be preferred by investors, as their higher quality and resilience raise the odds that they will deliver a satisfactory performance and outperform the broad market.
A line of eager ticket buyers outside a theatre on opening night showing the demand for live events.
Our Methodology
To find fundamentally strong penny stocks we used Finviz to filter for stocks with a stock price below $5.00, with at least 10% revenue growth in the last 3 years. Then we manually selected companies with stable businesses, established product lines, and a demonstrated history of performing well even during economic slowdowns. Finally, we compare the list with our Q4 2024 proprietary database of hedge funds’ ownership and include in the article the top 11 stocks with the largest number of hedge funds that own the stock.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
Vivid Seats Inc. (NASDAQ:SEAT)
Number of Hedge Fund Holders: 19
Vivid Seats Inc. (NASDAQ:SEAT) is an online ticket marketplace that facilitates the buying and selling of tickets for live events, including sports, concerts, theater, and other entertainment experiences. The company operates as a resale platform, connecting fans with third-party sellers offering tickets across a wide range of venues and price points. SEAT provides a proprietary technology platform, mobile app, and customer loyalty program to enhance the user experience and drive engagement. Revenue is generated primarily through service fees on ticket transactions.
In the latest Q4 2024, Vivid Seats Inc. (NASDAQ:SEAT) delivered $200 million in revenues, representing a 1% YoY increase, while adjusted EBITDA was $33 million, down 5% YoY. For the full year 2024, the company achieved $776 million in revenues, up 9% YoY, and $151 million in adjusted EBITDA, showing a 7% increase YoY. The company’s loyalty program demonstrated strong performance, with enrolled members making repeat orders 2-3x more frequently than non-enrolled customers, and repeat orders reaching 61% of total orders.
Looking ahead to 2025, Vivid Seats Inc. (NASDAQ:SEAT) expects marketplace GOV to be between $3.7 billion to $4.1 billion, revenues between $730 million to $810 million, and adjusted EBITDA between $110 million to $150 million. The company has maintained strong financial flexibility with approximately 1 turn of LTM net leverage and expectations of continued cash generation. Notable strategic developments include the successful integration of Vegas.com, which is yielding synergies through cross-listing and cross-selling, and the launch of European operations starting with the UK market. While facing increased competitive intensity in the market, management maintains a cautious outlook for early 2025 but expects to return to growth in the second half of the year. With 19 hedge funds owning the stock, SEAT is one of the best fundamental stocks to buy now.
Overall SEAT ranks 5th on our list of the 11 best fundamentally strong penny stocks to buy now. While we acknowledge the potential of SEAT as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SEAT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
