Small Cap Ideas

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>>> Alarm.com (ALRM) -


https://www.kiplinger.com/investing/stocks/small-cap-stocks/601067/10-splendid-small-cap-growth-stocks-to-buy


Market value: $3.3 billion
YTD total return: 59.8%
3-year annualized revenue growth: 24.4%


Alarm.com (ALRM, $68.67) was founded in 2000 to provide residential and commercial customers with cloud-based security solutions that work at all times. That means if the internet is down, the power is out, or the phone line is down, customers still have connectivity.

The firm has experienced significant growth over its 20-year history. In 2009, its growth attracted venture capital firm ABS Capital, which paid $27.7 million for the company. Three years later, it obtained $136 million in funding from Technology Crossover Ventures. In June 2015, Alarm.com went public, selling 7 million shares to investors at $14 a share. Except for 525,000 shares sold by ABS Capital, all of the net proceeds of the offering went to general corporate purposes.

According to the company's IPO prospectus, Alarm.com had revenues of $37.2 million in revenue in 2010 and an operating profit of $6.6 million. In 2019, it recorded sales of $502.4 million with operating income of $50.4 million. If you're counting (and we are), that's compound annual growth of 33.5% and 25.3%, respectively.

ALRM continues to grow the business through a combination of organic sales and strategic acquisitions. In May, it acquired Doorport Inc., which provides rental property owners with a cellular-based intercom system that can be inexpensively retrofitted to an existing setup.

Investors in this small-cap growth stock have done very well. And they should continue to do well given the strong execution of its business plan.

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