This Stock Passed Its Background Check

First Advantage $FA is not the kind of company most people think about every day.

But if you have ever applied for a job, filled out onboarding paperwork, gone through a drug test, verified your identity, or waited for an employer to clear your background check, you have been inside the world this company serves.

First Advantage helps businesses hire with confidence.

The company provides background screening, identity verification, credential checks, drug and health screenings, compliance tools, and ongoing workforce monitoring for employers worldwide.

That may not sound like the sexiest business on Wall Street. 

Still, it's becoming more important as hiring gets more complicated, fraud risk rises, and AI makes identity harder to trust. 

Companies need better tools to know who they are actually bringing into the building.

This is not some tiny niche operator either...

First Advantage serves more than 80,000 customers, including roughly two-thirds of the Fortune 100, and conducts more than 200 million screens per year across more than 200 countries and territories.

In other words, this is a real business sitting at the center of a very real problem.

And now the stock is starting to act like it.

First Advantage has been one of the hottest stocks in the market since bottoming earlier this year.

The stock has rallied from roughly $9 in late February to more than $20 today, more than doubling in just a few months as buyers continue to press this one toward the upper bound of a massive base.

The key level is $21.

That is where FA peaked several times in late 2024 and early 2025, and it's the line in the sand that separates a strong recovery from a potential brand-new primary uptrend.

Maybe this is where price needs to digest its recent move.

Or maybe the stock is ready to break out and begin the next reaction leg higher.

Either way, all eyes are on $21.

And when we turn to the earnings scorecard, the story gets even better.

First Advantage has beaten headline expectations across the board in five consecutive quarters.

It has also been rewarded for five consecutive earnings reports and eight of the last nine overall, which tells us the market loves what this company is doing.

The latest report was especially strong.

Revenue grew 8.6% YoY, adjusted diluted EPS increased nearly 53%, and the company maintained a 27.3% adjusted EBITDA margin while continuing to generate strong cash flow.

Management also reaffirmed full-year guidance, maintained retention at 97%, and highlighted 17 enterprise bookings in the quarter, each representing at least $500,000 in expected annual contract value.

That's exactly the kind of execution we want to see when a stock is attacking a major breakout level.

The AI story also matters here, but not in the goofy “we added AI to our press release” kind of way.

First Advantage is using AI across its platform to improve customer service, identity verification, fulfillment routing, fraud detection, and workflow efficiency. 

Management said digital identity is now standard in nearly every quoted deal, and roughly one-quarter of Q1 implementations included it.

That's important because identity is becoming a bigger issue as hiring gets more digital, more global, and more vulnerable to fraud.

In other words, the company is using AI to solve real problems for employers.

So what we have here is a stock with very strong technicals, fundamentals, and earnings sentiment. 

That doesn't mean FA has to break out tomorrow, and we wouldn't be surprised to see the stock pause near $21 after such a big move.

But if buyers can push FA through $21 and hold it, price could double again from here.

If we put a trade on this one, Beat Report members will be the first to know.

And that brings us to our next Beat Report Pitch Meeting.

Earlier this month, we held our first-ever public Beat Report Pitch Meeting. 

These are the meetings we usually hold internally, where our Beat Team brings their highest-conviction trade ideas to Steve Strazza and debates them in real time.

For the first time, we pulled back the curtain and let members watch the process LIVE earlier this month.

And because of the overwhelming amount of positive feedback we've received, we're doing it again on Monday.

If you want access to the next pitch meeting, our current watchlist, and the next trade alert we send to members, join Beat Report today.

We hope to see you there!

Have a happy and safe 4th of July,

-The Beat Team