3 STOCKS THAT (could) RISE A LOT

📌 Key points:

• DoorDash surged over 50% after turning a profit, proving the first profitable quarter can be a powerful breakout signal.

• Udemy, Varonis, and Montrose just became profitable, with improving fundamentals but limited technical momentum (for now).

• All three stocks are now on our BreakEven Watchlist, closely monitored for signs of a sustained rally.

What if a single data point could reveal companies on the verge of a breakout? That’s exactly what happened with DoorDash, and it all started with one powerful signal: the moment a company turns profitable after a streak of losses.

Today, we’ll unpack how that signal led to a 50% gain, and why three new names on our radar might be setting up for something big. You’ll want to read to the end, we’re diving deep into fundamentals, financials, and red flags for each stock.

The Power of the “First Profitable Quarter”

Inside our analytics platform, Forecaster, there’s a tool we use constantly: the Breakeven page. It highlights companies that just posted their first positive quarterly earnings after reporting losses in prior periods.

It might sound basic, but this single milestone has historically triggered strong bullish momentum. Case in point? DoorDash.

We bought DoorDash stock on November 12, 2024, at $175 per share. Today, it trades at $256. A 50%+ gain and it all started the moment the company flipped to profitability. That quarter marked a major turning point, and DoorDash kept building momentum from there, eventually closing the year in the green.

So What’s Next? Here Are 3 Stocks to Watch

We recently scanned the latest BreakEven list and found three companies that just turned profitable. Each has its own story, risks, and opportunities. Let’s break them down.

1. Udemy (UDMY)

Industry: Online Education
Why it stands out: First profitable quarter + strong revenue growth

Udemy is a familiar name in the e-learning space, a digital marketplace for video-based courses. It’s a scalable model: one course can be sold to 10 or 10,000 users with almost no extra cost. That makes it potentially very profitable.

Here’s what we like:

• Revenue is growing consistently, around 15–20% YoY

• Losses have been shrinking steadily since 2022

• No significant debt

• Undervalued based on Enterprise Value/Sales, a useful ratio when earnings are still minimal

Still, there are warning signs. The Altman Z-Score is on the lower end, indicating potential financial fragility. The Piotroski Score is improving, positive momentum, but the Qualitative Score remains low. Some red flags in the latest earnings call include:

• Decline in revenue from consumer segment

• Higher churn among small/mid-sized business customers

• Uncertainty around renewals of pandemic-era contracts

Overall, this is a stock worth watching, but not buying yet. It’s on our Breakeven watchlist, waiting for clearer momentum.

2. Varonis Systems (VRNS)

Industry: Cybersecurity / Data Management
Why it stands out: Strong fundamentals + recent profit turnaround

Varonis builds intelligent software for data security and compliance, think of it as digital armor for sensitive corporate information.

Here’s what we found:

• Revenue continues to climb, with +8% YoY growth

• Net income is still negative but improving dramatically (from -96M to -1M TTM)

• Transitioning to SaaS, which should improve margins long-term

That said, valuation is a bit rich. Based on EV/Sales, the stock appears overvalued. Other metrics:

• Altman Z-Score slightly declining

• Piotroski Score not convincing (no clear upward trend)

• Benish M-Score suggests accounting practices are clean

The company is watching macro risks, but expects continued revenue growth and is wrapping up its transition to a subscription model. For now, this is a solid candidate for the watchlist, just not a clear buy yet.

3. Montrose Environmental (MEG)

Industry: Environmental Services / Waste Management
Why it stands out: First quarter in the green + bullish long-term theme

Montrose provides services in pollution control, remediation, and environmental compliance, a crucial sector as global regulations tighten and ESG pressures rise.

After years of operating at a loss, Montrose just posted its first profitable quarter. That alone is notable, but here’s more:

• Revenue growth is consistent

• Operating expenses spiked recently, offsetting gains

• Valuation is a bit high (EV/Sales above 4)

• Altman Z-Score and Piotroski Score are weak

• Slight past concern from Benish M-Score, but nothing alarming

What’s happening behind the scenes?

• Revenue dropped in one key segment due to non-recurring contracts

• Earnings fell short year-over-year

• Margins are a focus moving forward

• Company forecasts strong demand in remediation and analysis

Despite being near historical price lows, the fundamentals are slowly improving. That said, we don’t see strong technical momentum yet. Like the others, it’s a watchlist stock for now.

Why This Strategy Works

The first profitable quarter is more than just a feel-good metric. It often marks a real turning point in a company’s trajectory, both fundamentally and in investor sentiment. That’s why our BreakEven list is one of the most powerful signals in Forecaster.

DoorDash proved it: after turning a profit, the stock didn’t just rise, it launched. And while Udemy, Varonis, and Montrose each have risks, their current position, early in a turnaround, makes them worth keeping on the radar.

With the right tools, the right data, and a bit of patience, spotting these turning points can become a repeatable strategy.

Want to explore the Breakeven list for yourself? Open up Forecaster, check the latest updates, and see which companies are quietly stepping into profitability. You might just find the next DoorDash.