Jim Cramer on Arlo Technologies: "Wait for a Buyback Before You Buy More"

Arlo Technologies, Inc. (NYSE:ARLO) is one of the 12 stocks on Jim Cramer’s radar recently. The company was extensively discussed by Cramer during the episode as he said:

“Where do I come down on the stock? Oh, here’s the problem: It’s tricky to analyze a company like Arlo Technologies because there’s a lot of competition in the home security space. We’re not just talking about mom and pop outfits here. We’re talking about serious, established companies like ADT and mega-cap technology outfits that have stretched their tentacles into home security, think Google Nest, Amazon Ring. That said, Arlo’s stock is darn cheap compared to its growth rate. Company’s earnings expected to grow at 55% clip this year, yet the stock only sells for 27 times earnings. Where I’m from, that’s a steal. While competitors like ADT trade at a much more modest 10 times earnings, they also have much slower growth rates.

In some markets, growth-oriented managers would be willing to pay more than 50 times earnings for a company with a 50% earnings growth rate. And honestly, that’s pretty likely. While Arlo’s product revenue is down, their higher-margin subscription service business is growing like a weed. Just keep in mind that you’re buying stock that’s up over 50% since it reported in early May, buoyed by the announcement earlier this month that Arlo had eclipsed $300 million in annual revenue, and that’s the recurring revenue.

Okay, so here’s the bottom line: This is a tough one here. See, I think Arlo Technologies has a real good story, relatively cheap stock, but then again, the thing has run up so rapidly that it might be due for a cooling-off period. I don’t like to recommend stocks that have moved that far that fast. So here’s what you can do: You got my blessing to put on a small position here, but you gotta wait for a buyback before you buy more.”

Arlo Technologies (NYSE:ARLO) provides cloud-based security solutions through a range of smart cameras, doorbells, and monitoring systems, supported by subscription services that include video recording, emergency response, and professional monitoring. The company’s product lineup features high-resolution video, wide field of view, advanced detection capabilities, and remote access tools for both personal and business use.

While we acknowledge the potential of ARLO as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.