The best tech disrupters aren't always creating futuristic new gadgets or breakthrough technologies. Sometimes they take existing technology and apply it to old problems.
Our pick today has done just that. It's used the power of the Internet, smartphones, and social media to transform the family caregiving industry.
That's a sector with $330 billion in annual spending in the United States alone.
As a number of our investment experts have written, demand for senior care is set to rise drastically over the next 10 to 20 years.
The rise of two-worker and single-parent households has also driven demand for childcare.
Busy lifestyles and increased travel means people need help with pet care and housekeeping.
And parents who can afford to give their children better lives are increasingly opting for tutoring and dedicated special needs care.
Of the 48 million households making up the target market for caregivers, more than 95% are still turning to newspaper ads, referrals, online classifieds, and agencies.
The first three options can be unattractive due to their lack of scale, safety, and reliability. And the only way to get around that is to shell out thousands of dollars for an agency - not a viable option for many.
So one company stepped in to solve the problem...
Its platform has connected over 12 million care professionals with over 16 million families worldwide. It now spans 20 countries and 90% of U.S. zip codes.
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Requests for professionals come with a guaranteed response within three days. The professionals are vetted by the service and rated by members, and they can always be held accountable.
And it's inexpensive too. Typical fees run $200 or less per year, compared to as much as $4,000 for an agency. That's because the costs are spread out among a large network of users rather than an exclusive, affluent client base.
It's still in the intermediate stages - the company was only founded in 2007 - but it is just now taking off. Sales are rising by double-digit percentages each year, and earnings per share (EPS) more than tripled in 2017.
As we'll explain, this is one that could give you a quick pop early on and then offer returns for years to come.
Now Out of Silicon Valley's Blind Spot, This Company Is Shifting to the Fast Lane
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Care.com Inc. (NYSE: CRCM) is the world's largest online marketplace connecting families with caregivers.
The families on Care.com are able to search for and select their own caregivers based on their personal profiles, skills, and a variety of vetting options including third-party background checks. For those families that are new to the process, Care.com offers a number of tools and resources to help them make the best choice.
Once they've selected their caregiver, they can pay electronically through the service and get continual assistance along the way. Families can even subscribe to the company's tax preparation services to stay in compliance with all the relevant regulations.
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Since 2008, job applications on Care.com have grown at a 66% compound annual growth rate (CAGR), and caregivers have increased at a 58% CAGR. At this point, a new match on Care.com is being made every three minutes.
Care.com's founder and CEO, Sheila Lirio Marcelo, thought of the idea when she had her first child and had difficulty finding a caregiver. She sat on that idea for years. Then her father had a heart attack while watching her second child. Suddenly she needed care for both the kids and her dad.
It was time to make her idea a reality, so other families wouldn't have to face the same challenge alone.
Marcelo got some sideways glances from potential investors when she was pitching her idea. Silicon Valley at the time had a huge blind spot when it came to these kinds of personal issues - especially issues that are more likely to be a burden on women than men.
Thanks in part to Care.com's success, that's starting to change. More than 150 companies include the service as part of their employee benefits packages. That includes giants like Facebook.com Inc. (NASDAQ: FB) and Alphabet Inc. (NASDAQ: GOOGL).
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These companies are leading the way, but there's still a lot of room to run for Marcelo and company. Matching services like Care.com have still only penetrated about 4.8% of target households in the United States. As more and more families catch on to what Care.com has to offer, you can expect a big boost in its share price.
In fact, a boost could be on the way sooner than you think...
Why Now Is the Time to Buy CRCM
The recent downturn in the market has pushed CRCM's share price down with it. The stock is now about 25% off its 52-week high.
But considering the company's growth, it's hard to see that as anything other than a great buying opportunity.
Sales have been rising steadily. According to FactSet, sales are projected to rise 10.5% in 2018 and 13.5% in 2019.
Earnings, however, are growing much faster than that. EPS rose 263% in 2017. Plus, Care.com has beat EPS estimates for eight straight quarters - and not by a little. In four quarters last year, the company surpassed expectations by an average of 138%.
This buying opportunity isn't lost on Wall Street either. Analysts at both Stifel Nicolaus and Craig Hallum Capital Group have set a price target for CRCM of $24. That would represent a gain of nearly 40% from its current price.
You can enjoy that short-term pop and then hold onto this one to reap long-term gains. As we said, it took Silicon Valley a while to catch on to the fact that the world needs this service. Now that it's here, it's like a magnet for those millions - or billions - of families that could use a better way to find caregivers.
Grab this stock now, and it could be a magnet for profits too.
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About the Author
Stephen Mack has been writing about economics and finance since 2011. He contributed material for the best-selling books Aftershock and The Aftershock Investor. He lives in Baltimore, Maryland.