Owlet is a speculative buy: FDA approval and Amazon policy give it a competitive moat, and subscription growth supports long-term revenue growth.

And the final one may not be a stock that you know unless you have small children. That is Owlet. Owlet, the smallest company I'm going to talk about today under a 200 billion 200 million-dollar market cap.

Enterprise value to sales is about 1.5. So, pretty good valuation, but not all that profitable of a company. I'll get to that in just a second. But, I want to show you exactly what Owlet sells.

And this is their primary product is this combination of this baby monitor sock. This is going to tell you what your baby's heart rate is, what their oxygen level is. It's all medical grade.

It's all cleared by the FDA. By the way, that's a huge thing because it's the only company that has that FDA approval. And then they're pairing that with the monitor. So, this is a typical thing that parents are going to get is a baby monitor.

Pair that with a value-add product like the like the sock. That's the kind of solution that all parents are looking for. But, the real change for over the last year or so is their focus on their core markets and their introduction of this Owlet 360 product.

So, this is the number of Owlet 360 paying subscribers they had as as of the end of the first quarter of 2025, that was about 40 48,000 people. Now, it's about 130,000. This is where you get to Now, you have three things that you're bundling together.

So, you have the sock, you have the monitor, and you have Owlet 360. What you get with Owlet 360 is information about your baby. That's maybe not the kind of thing that you would pay $100 a year for.

What they're adding in the future is a lot of telehealth options. So, if you think about when your baby has an ear infection, when they have a cold, when they have a fever, you need to often get answers now, and those In kids never get sick when it's an opportune time, when the doctor's office is open, when you have time to go take them in.

They get sick in the middle of the night. So, getting those answers immediately from a product like Owlet with the 360 membership, I think I could ultimately make this incredibly valuable bundle.

And this is what's ultimately going to drive that continued revenue growth. You can see over the past year, revenue growth nearly 30%, and those operating margins are getting a little bit better.

If we look at free cash flow, this has been the real challenge for the company is that free cash flow has been negative, and that's still the case today. $8.5 million worth of negative free cash flow.

But, we're starting to move in the right direction. So, you're starting to get some operating leverage in the business.

starting to move in the right direction. So, you're starting to get some operating leverage in the business. And here's another thing to keep in mind. This is from the conference call for the second quarter.

In early June, we received a letter from Amazon, and we're confident other companies in the baby monitor and category did as well. The letter notified sellers of baby monitoring product products that measure and monitor vital signs at any such product lacking FDA clearance would be deactivated on Amazon the platform effective August 10th, 2026, which was yesterday as of that recorded.

And we don't know what that impact is going to be on Owlet sales or on their competitor sales, but they did say that a lot of their competitors were discounting their products in theory to clear it from their Amazon inventory.

This should be a nice tailwind for Owlet because this is going to be the only product with that FDA approval on Amazon, which is the biggest shopping platform. I think they're really foreclosing the competition here.

They have a very expensive, difficult to get FDA approval to monitor their to market their devices as FDA approved devices. That's not something that every other company is going to get.

You can't just start a baby monitoring company and get that kind of approval without spending millions of dollars. Owlet has gone through that work. That is going to be the moat that they're going to be able to build the business on, continue this revenue growth that is nearly 30% over the past 3 years.

This is the most speculative of the companies that I've talked about here, but with a market cap under $200 million, and this is a product that's gaining market share for families in the US and in Europe, I think we're going to see Owlet continue to grow.

That subscription service is a very, very high-margin product, something they're bundling in with the duo recently. I think there's going to be a lot of tailwinds for Owlet long-term.

And we don't know what that impact is going to be on Owlet sales or on their competitor sales, but they did say that a lot of their competitors were discounting their products in theory to clear it from their Amazon inventory.

This should be a nice tailwind for Owlet because this is going to be the only product with that FDA approval on Amazon, which is the biggest shopping platform.

I think they're really foreclosing the competition here. They have a very expensive, difficult to get FDA approval to monitor their to market their devices as FDA approved devices.

That's not something that every other company is going to get. You can't just start a baby monitoring company and get that kind of approval without spending millions of dollars.

Owlet has gone through that work. That is going to be the moat that they're going to be able to build the business on, continue this revenue growth that is nearly 30% over the past 3 years.

This is the most speculative of the companies that I've talked about here, but with a market cap under $200 million, and this is a product that's gaining market share for families in the US and in Europe, I think we're going to see Owlet continue to grow.

That subscription service is a very, very high-margin product, something they're bundling in with the duo recently. I think there's going to be a lot of tailwinds for Owlet long-term.

So, the stock four stocks that I talked about here today, Hims & Hers, Zeta Global, Lyft, and Owlet.

Let me know which one of those you think has the highest potential. These four are all stocks that I own.