One Value, One Growth, and One Momentum Stock For Diversification

Key Points

• Value stocks are trending early in 2025, but investors seeking diversification might consider a multi-factor approach.
• One way to broaden a portfolio is to target different names based on various factors, such as value, growth, and momentum.
• DDI, GCT, and SPCB provide a compelling value, growth, and momentum option, respectively, for early 2025.

Early in 2025, value stocks emerged as a popular choice among investors seeking market-beating returns. However, factor-based investing strategies can be notoriously difficult to predict future trends. For this reason, some investors might opt to diversify their portfolios not only through individual names, industries, and sectors but also according to different factors.

Three stocks with Strong Buy ratings from analysts may be particularly enticing for investors looking to explore a diversified factor-based approach. DoubleDown Interactive Co. Ltd. NASDAQ: DDI is a South Korean digital game developer offering a compelling case as a value prospect; end-to-end B2B e-commerce firm GigaCloud Technology Inc. NASDAQ: GCT may be a strong small-cap growth opportunity; and up-and-coming cybersecurity name SuperCom Ltd. NASDAQ: SPCB could attract attention from momentum investors.

When combined in a single portfolio, these leading stocks also provide geographical and sector diversification.

DoubleDown's Cash Flow and iGaming Growth Highlight Undervalued Potential

DoubleDown offers a variety of casino and cash-me-out games through third-party platforms. The firm's trailing P/E ratio of 4.0 and forward P/E ratio of 4.5 are both lower than many rivals in the gaming industry, thanks in part to DoubleDown's share price decline of about 19% over the past year as of February 27\8, 2025.

In the fall of 2023, DoubleDown expanded its operations into the iGaming space—online betting on a host of different events and games—through the acquisition of SuprNation. Since that time, it has grown this segment significantly, as SuprNation revenue in the fourth quarter of 2024 reached $9 million, the highest quarterly performance since DoubleDown's acquisition.

This figure is also about 30% higher than DoubleDown's estimate of SuprNation's potential quarterly run rate prior to buying the company. However, with consolidated revenue of $82 million companywide during the quarter, SuprNation has yet to keep pace with DoubleDown's legacy casino gaming business.

DoubleDown's cash flow capabilities are generally strong, as the company generated a cash flow of over $148 million last year. However, free cash flow growth has not been steady. Otherwise, however, DoubleDown's financial health seems excellent, with earnings consistently beating predictions except for the latest quarter. Investors are optimistic about its ability to continue building on SuprNation's iGaming base and will likely find the company undervalued.

GigaCloud’s Strong Growth Prospects Tempered by Stock Volatility and Tariff Concerns

GigaCloud's share price history over the last several months has been puzzling—the firm's stock dropped by almost 49% over the past year as of February 28 despite a series of solid earnings beats. To take the most recent quarter as an example, the company noted more than $303 million in revenue, a 70% year-over-year (YoY) improvement, as well as record-high net income of $40.7 million, up over 68% YoY.

So, what is behind the bumpy stock performance for this company with otherwise outstanding growth prospects? It could be that investors have shied away due to concerns about the impacts of tariffs and increasing procurement risks on GigaCloud's business.

However, the company's international business is thriving, and expanded partnerships with several furniture makers, announced in early February, may help mitigate the negative impact of future tariffs. Investors willing to wait out the volatility may find that GigaCloud's fundamentals continue to drive growth.

SuperCom's 143% Gains and Expanding Contracts Signal Momentum Despite Recent Dip.

Digital identity services firm SuperCom's 143% gains in the last year make it enticing as a potential momentum pick. Notably, while shares have nearly tripled in the last six months, they have more recently dipped, shedding more than 26% in the month leading to February 28. While this may indicate a portion of the investor base that feels the stock is overhyped, SuperCom's rapidly expanding customer base might suggest otherwise.

In 2025 alone, SuperCom has announced major new contracts for a national domestic violence monitoring project in the EMEA region, more than 200% growth in units of its PureTrack GPS for an unspecified European government in the last year, a new multi-year contract with a northern European government, and a slew of new contracts and expansions with various U.S. state governments and agencies.

Maxim Group reiterated its Buy rating for SPCB shares in January and boosted it price target by 50% to $18 per share, more than double the price of shares as of February 28. Based on this estimate, it would seem SPCB's rally may just be getting started.