- Undervalued and under-the-radar, these seven unknown stocks to invest in have a great deal of potential.
- Acacia Research (ACTG): A pending exercise of ACTG’s warrants could provide it with the capital it needs to pursue larger deals, raising its profile.
- Alto Ingredients (ALTO): Alto has room to run if it successfully transforms into a producer of higher-margin specialty alcohol products.
- Hudson Technologies (HDSN): The few market participants following this stock may be underestimating this refrigerant company’s positive catalyst.
- KonaTel (KTEL): While KTEL is up 20-fold since 2020, the shares of this small telecom company can climb a great deal more.
- NewLake Capital Partners (NLCP): The shares of this cannabis REIT could rise over time, if its shares move to a major exchange.
- Preformed Line Products (PLPC): This stock could soar once the market becomes more aware of its indirect EV catalyst.
- Thryv Holdings (THRY): Completing its transformation from a phone book publisher to a software company could take it out of little-known status.
It’s up for debate whether the overall stock market has hit a bottom, but many stocks have clearly become oversold. That’s the case for many unknown and little-known stocks. Consequently, there are now plenty of unknown stocks to invest in that can climb tremendously.
These types of stocks, which are mostly small-cap and micro-cap names, usually are not followed by many analysts. These under-the-radar names are also too small for many institutional investors to consider. Due to both these factors, these stocks often tend to be mispriced.
It can take the market a long time to determine fair prices for underfollowed stocks. As a result, small investors have plenty of time to uncover these hidden gems before they take off.
Undervalued and under-the-radar, these seven unknown stocks provide investors with big opportunities. Once the bull market returns, all of them could rally tremendously.
|NLCP||NewLake Capital Partners||$14|
|PLPC||Preformed Line Products||$72.40|
Acacia Research (ACTG)
Acacia Research (NASDAQ:ACTG) is what’s known as a net operating loss (or NOL) shell. For several years, Acacia’s objective has been to monetize the tax deductions it accumulates by losing money. It accomplishes that goal by purchasing cash-generating assets and businesses.
ACTG stock soared during 2021, thanks to its successful investments in the biotech space. In the past year, though, Acacia’s shares have retreated. At first glance, it may seem that the company’s good days are behind it. But that conclusion may not be accurate.
Acacia is currently negotiating with its main shareholder, Starboard Value, to obtain more capital from Starboard. Their plan mainly involves Starboard exercising its warrants to buy ACTG stock.
If Starboard exercises its warrants, Acacia will have the ability to pursue larger deals. And larger deals could raise ACTG’s profile, helping to lift its stock price, whose valuation is currently below the company’s book value.
Alto Ingredients (ALTO)
Alto Ingredients (NASDAQ:ALTO) is a maker of industrial alcohols and fuel-grade ethanol. A big jump in ethanol prices, plus a shift towards producing specialty alcohols, dramatically raised Alto’s profitability.
While these factors resulted in ALTO stock going parabolic in late 2020, since 2021 the stock has delivered a mixed performance. The few market participants following Alto are on the fence as to whether the company’s long-term strategic plan to become a maker of more profitable specialty alcohols will succeed.
However, Alto’s management appears confident that the company will continue to report strong results. Alto plans to return much of its recent earnings back to its shareholders through a $50 million share repurchase program.
Trading for just 12.3 times its earnings, Alto’s stock has ample room to run if the company can successfully raise its profit margins.
Hudson Technologies (HDSN)
It may be a stretch to say that Hudson Technologies (NASDAQ:HDSN) is an unknown stock, since the shares of this refrigerant services company have more than doubled over the past year.
Yet while some investors have already become aware of HDSN, that doesn’t mean that the shares are accurately priced. Although Hudson’s profit are expected to drop next year, its stock today trades for just seven times analysts’ average 2023 earnings per share estimate. This valuation would make sense, if this company’s earnings were on track to keep declining over the next few years.
But as a Seeking Alpha commentator argued in August, changes in federal environmental regulations will boost Hudson Technologies’ financial results. Those changes will enable the company to continue to report strong results, boosting the shares and potentially enabling them to climb 100% or more.
Despite the big rally of KonaTel (OTCMKTS:KTEL) stock since 2020, KONA, which provides government-subsidized phone and mobile data services, remains one of the best unknown equities to invest in. While the shares are up more than 20-fold since 2020, so far they have only caught the attention of a small number of retail investors
This could, however, change over time. Operating in a niche, recession-resistant industry, KonaTel could continue to grow at an above-average pace, boosting its profitability and enabling KTEL stock to rise much further.
And as the company grows, it may decide to move its shares from the over-the-counter market to a major exchange like the Nasdaq. That would make it more visible to investors, boosting its valuation.
NewLake Capital Partners (NLCP)
With the legalization of marijuana in several U.S. states, a new type of real estate has emerged: industrial space that’s used for pot production. As a result, several cannabis-themed real estate investment trusts (or REITs) have emerged.
Innovative Industrial Properties (NYSE:IIPR) is the most well-known such REIT, but relatively unknown NewLake Capital Partners (OTCMKTS:NLCP) may be the better buy. With its recent dividend increase, NLCP’s forward dividend yield is now nearly 10%. IIPR stock, in contrast, has a forward yield of around 7.4%.
NLCP trades at a price-to-funds-from-operations (P/FFO) ratio of just 9.4 times, versus 12.2 times for IIPR. One way NewLake could close this valuation gap is to move its shares from the OTC market to a major exchange.
The continued legalization of pot by U.S. states and possibly by the American federal government can also boost this underfollowed specialty REIT.
Preformed Line Products (PLPC)
Preformed Line Products (NASDAQ:PLPC) manufactures anchoring and control hardware products for the telecom and utilities industry. A low-profile company in a dull industry, PLPC unsurprisingly hasn’t gotten a great deal of buzz.
Preformed also is not currently covered by any Wall Street analysts. These factors work to your advantage, however because you can buy PLPC stock at its current low valuation of eight times its earnings, as the market remains largely unaware of its long-term potential.
PLPC actually has a great deal of exposure to the rise of electric vehicles (or EVs). As one online commentator has argued, PLPC is a “backdoor EV play.” That’s because mass adoption of EVs is going to require an expansion of America’s power grid.
That, in turn, will create strong demand for Preformed Line products, enabling its profits to continue to grow and raising PLPC stock.
Thryv Holdings (THRY)
From mid-2021 through early 2022, Thryv Holdings (NASDAQ:THRY) became much better known. That’s because the market began to become more aware of this phone book publisher’s metamorphosis into a business software company and bid up its shares.
Unfortunately, due to this year’s recession worries, THRY stock has pulled back, and not many people are talking about it. However, as shown by its latest financial results, Thryv is continuing to transform itself. Indeed, its old business continues to generate positive cash flow that it’s using to fund the growth of its software-as-a-service (SaaS) platform.
Meanwhile, the SaaS business keeps growing. Last quarter, its total SaaS revenue jumped 26% year-over-year. If Thryv can continue to “thrive” despite a looming recession, those already aware of THRY stock could regain their confidence in its transformation. Also, more investors could become acquainted with this under-the-radar SaaS play, enabling its shares to hit new highs.
This post originally appeared at InvestorPlace.
On the date of publication, Thomas Niel held long positions in ACTG and THRY. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.