The shake-up in the Global Industry Classification System (GIC) last year shined the spotlight on communication services, a broad category of stocks at the intersection of IT and telecom. As it turns out, the Nasdaq is filled with such companies, including small caps with plenty of room for upside.

If we focus on companies whose revenue growth exceeded 20% last year and whose market capitalization is at least $1 billion, we arrive at two promising plays that can be leveraged for future growth. They are CarGurus Inc. (NASDAQ: CARG) and Glu Mobile Inc. (NASDAQ: GLUU).


CarGurus (CARG)

  • Market Cap: $4 billion
  • Annual Revenue Growth: 43.3% (2018)
  • Free Cash Flow: $44.25 million

CarGurus may not sound like a traditional telecom/communications stock, but its inroads into data analytics and custom search algorithms have turned it into a leading marketplace for new and used vehicles. The company is 14 years old, but didn’t go public until October 2017. In the year after it went public, CARG stock nearly doubled. It plunged just as hard during the market crash of Q4 2018 and has since recovered only modestly.

The company more than doubled its sales between 2016-2018 and increased its free cash flow by nearly four times.

Where CarGurus really stands out is in revenue growth and free cash flow. The company more than doubled its sales between 2016-2018 and increased its free cash flow by nearly four times. This means there’s plenty of opportunity to enhance shareholder value.

The company also has a large addressable market: it is estimated that in 2018 the online car dealership industry in the United States was valued at $30 billion, an increase of 4% from the previous year.


Glu Mobile (GLUU)

  • Market Cap: $1.5 billion
  • Annual Revenue Growth: 27.9% (2018)
  • Free Cash Flow: $29 million

Glu Mobile is another fast-growing company operating on the cusp of an ever-expanding market. The mobile gaming enterprise publishes free-to-play games for connected devices and works with third-party brands to deliver games for the likes of Gordon Ramsay and Kim Kardashian.

Glu has more than tripled its revenue since 2013 and has grown its sales in nine of the past nine years. In 2018, free cash flow turned positive for the first time in four years.

In terms of share performance, GLUU has more than doubled over the past 12 months. The stock was among the first to rally in Q4 2018 and has gone on to set multi-year highs in recent months. GLUU’s rapid ascent in recent months could limit upside potential for the stock, but positive fundamentals suggest future growth is still very much possible.



The technology-rich Nasdaq offers a multitude of small-cap opportunities for investors looking to get in on fast-growing companies. CarGurus and Glu Mobile meet the criteria based on revenue, market cap and addressable markets.

Disclaimer: Author holds no investment position in CarGurus or Glu Mobile at the time of writing.