Latch (NASDAQ:LTCH) is one of the more interesting technology companies to go public in the recent boom in special-purpose acquisition companies (SPACs), and some of our experts like what they see. In this Motley Fool Live video clip, recorded on Oct. 11, Fool.com contributor Jon Quast explains to colleague Matt Frankel, CFP, why Latch is his favorite stock to buy right now. 

Matt Frankel: This is Latch ticker symbol LTCH. I can talk about this for an entire show, but I won't do that. I will hand it over to Jon and let him go with it.

Jon Quast: Yeah, Matt, you and I have actually talked about this company a fair bit in recent weeks on Motley Fool Live and Backstage Pass. I'm not going to rehearse all the old details, I will bring new viewers up-to-speed. That Latch is a property technology company, typically in apartment buildings, they get their smart lock device on the doors. Once it is actually installed and to new build. While the building is getting built, they may have signed a contract, but they don't actually have the physical device in place yet.

When they've signed the contract, it's bookings, when the building is actually built and then installed that smart device on the door, then this counted as revenue, and then over the course of time, they will generate software revenue from the tenants who are paying, I think it's between $7 and $9 a month, somewhere in there per door, the software revenue. Now, the product revenue has terrible profit margins. In fact, it's negative. They pay more in making the device than they actually get when they sell the device. But the software margins have 90% profit margins and overtime, the software revenue will supersede the product revenue.

What we have seen here recently and why the stock is down, is because revenue, even though it grew a whopping 227%, as you can see here, it's only $9 million in revenue, and that is actually behind expectations because there was a delay in construction of apartment buildings. Construction companies are struggling to get workers right now and projects are being delayed, and so what Latch was expecting to finally be registered as revenue, is getting pushed out by a quarter by six months, things like that. The revenue is behind schedule, but the bookings was up 102% year-over-year and is actually ahead of schedule right now.

Why is this? Because more apartment complexes than what they had previously intended to sign on these new deals, they're signing on more than they actually expected. That is really interesting, it shows me that Latch is heading in the right direction signing up these new customers. I promised I was going to talk about optionality here. I really think that on its own, it's core competency. This get the lock on the door and start getting the software revenue with 90% profit margins, I think that is going to be a powerful driver for the stock over the next five years. I really do. I think it's a market beater just on that. But that is Latch's foot in the door and something we haven't talked about all that much.

Here's the core business right here, unlocking, access sharing. You've got somebody dropping off a package of the apartment, you can give them access Smart Home intercoms, but here are some services that they expect to launch in time. Insurance, Internet, bundling that in with the subscription revenue that they're already charging for the operating system, for the Latch ecosystem. They are planning on launching insurance products and also Internet to go along with that. That to me is just icing on the cake potential for what I already see as an attractive opportunity.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.