Although the concept of millionaire-maker stocks will always attract attention, at the moment, investors must realize the rules have changed. Fundamentally, the Federal Reserve remains committed to attacking the inflation crisis through hiking the benchmark interest rate. That’s already resulted in a sharp reduction in the real M2 money stock or a tightening of liquidity.
Under such a scenario, “traditional” millionaire-maker stocks to buy – your growth-centric market ideas – present unusually high risks. Instead, investors should focus on what’s going to work under a potentially deflationary backdrop of rising rates. For that, market participants should target companies with stable fiscal profiles.
To be fair, this strategy will take longer to marinate. However, we must deal with current realities. Frankly, the wild speculative cycle of the post-coronavirus-pandemic period is over. Nevertheless, there are some hidden gems among millionaire-maker stocks to buy. Here’s a peek at some of the most compelling.
SCI Engineered Materials
Flexible Solutions (FSI)
Based in Victoria, British Columbia, Flexible Solutions (NYSEAMERICAN:FSI) develops, manufactures and markets specialty chemicals which slow the evaporation of water. At time of writing, Flexible Solutions commands a market capitalization of $36.9 million, representing one of the small-cap plays among millionaire-maker stocks. On a year-to-date basis, FSI slipped 22%. It features a price of two pennies above $3.
While it’s not the greatest-looking chart, prospective speculators should note that FSI gained nearly 23% in the trailing half-year period. Fundamentally, the company ties in with broader environmental initiatives. That’s because Flexible facilitates water and energy savings across various industrial applications.
Financially, FSI will likely attract attention for its three-year revenue growth, which stands at 22.2%. This figure beats out more than 88% of the competition. Additionally, the company owns solid profit margins which rank in the underlying industry’s top half. On a final note, the market prices FSI at 9.7-times trailing-12-month earnings, favorably below the industry median of 16.4 times.
SCI Engineered Materials (SCIA)
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Headquartered in Columbus, Ohio, SCI Engineered Materials (OTCMKTS:SCIA) is a specialty industrial firm. Specifically, SCI produces engineered products such as evaporation pieces and ceramic powders. Also, the company serves several sectors, including automotive, defense, aerospace and solar, among many others.
Currently, the company commands a market cap of just over $14 million, making it one of the nano-cap names among millionaire-maker stocks. As well, the price point will surely attract some speculators, trading hands at $3.11. Since the start of the year, SCIA “only” lost about 8.5%. Compared to the over 17% loss of the benchmark equities index, SCI Engineered has put on a relatively solid performance.
Financially, market gamblers will probably take note of the company’s iron-tight balance sheet. In particular, SCI enjoys a strong cash-to-debt ratio of 14 times. In contrast, the industry median ratio is only 2 times. Finally, SCIA trades at 8.2-times TTM earnings, which is rather cheap for the industry.
Surge Components (SPRS)
One of the lesser-known enterprises, Surge Components (OTCMKTS:SPRS) specializes in technological components. From electronic switches to capacitors (electrolytic, film and ceramic) to discrete semiconductors, Surge undergirds the needs of various industries and applications. Still, as an unsung hero, it might seem incredibly risky.
After all, the company’s market cap sits at $17.7 million – not exactly encouraging stuff on the surface. Further, it has a “lowly” price tag, only $3.20. In addition, SPRS has been rather volatile this year, shedding nearly 16% of equity value. Despite these apparent flaws, investors should still put Surge Components on their radar for millionaire-maker stocks to buy.
Primarily, despite first impressions, the company enjoys a strong balance sheet. For instance, its cash-to-debt ratio is 5 times, ranking higher than 71.5% of the industry. As well, its Altman Z-Score stands at 4.59, reflecting low bankruptcy risk over the next two years. Finally, Surge represents a high-quality business with a return on equity (ROE) of just under 24%.
Deswell Industries (DSWL)
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Based in the U.K., Deswell Industries (NASDAQ:DSWL) manufactures injection-molded plastic parts and components, electronic products and subassemblies. In addition, it also focuses on metallic products for original equipment manufacturers (OEMs) and contract manufacturers. Fundamentally, the company draws relevance for quietly undergirding multiple systems across industries.
Like the other millionaire-maker stocks to buy, Deswell represents a lesser-known enterprise, featuring a market cap of only $51.07 million. Since the start of the year, DSWL declined 15.5%. At the moment, shares trade hands for $3.25. Notably, Deswell also carries a bonus via its forward yield of 6.15%.
Arguably, what’s even more attractive than that is the company’s balance sheet. Specifically, it carries zero debt, allowing management greater flexibility and resilience during these uncertain times. Moreover, the market prices DSWL at 6.37-times trailing earnings. In contrast, the industry median price-earnings ratio is 17.5 times.
Silo Pharma (SILO)
Based in New Jersey, Silo Pharma (NASDAQ:SILO) seeks to address underserved medical conditions. These include Alzheimer’s, multiple sclerosis, rheumatoid arthritis and stress-induced psychiatric disorders. To be fair, SILO represents one of the riskiest names among millionaire-maker stocks to buy. While many pharmaceutical firms have taken aim at underserved diseases, clinical disappointments ring loudly.
As well, SILO presents structural risks for prospective investors. At time of writing, Silo Pharma commands a market cap of only $10.7 million. To be fair, millionaire-maker stocks aren’t called this because they’re safe and dependable ideas. At the same time, that’s a very low valuation. Plus, shares plunged almost 49% YTD. Don’t say I didn’t warn you.
Now, onto the good stuff. Like Deswell above, Silo carries zero debt. Therefore, it may be able to weather certain disappointments in its clinical journey. Also, the company features a strong ROE, with Gurufocus.com rating it significantly undervalued.
Vaalco Energy (EGY)
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One of the more established names among millionaire-maker stocks to buy, Vaalco Energy (NYSE:EGY) offers relevance to investors. Headquartered in Houston, Texas, Vaalco engages in hydrocarbon exploration. As of December 31, 2021, the company had 11.218 billion barrels of oil equivalent of proved reserves, all of which was petroleum.
Given the context of high energy prices and the tight midterm elections, Vaalco brings much relevance to the table. Essentially, with Russia blackmailing the west and its allies, hydrocarbon-producing countries have little choice but to expand production. In addition, Vaalco should benefit from broader investments in hydrocarbon exploration. Honestly, while the Democrats as a party outperformed, I’m not sure if the green-energy friendly Biden administration can weather an electoral challenge in 2024.
For investors of millionaire-maker stocks to buy, they’ll likely focus on Vaalco’s income-statement metrics. Figures such as three-year revenue growth and net margins rank among the industry’s best. And despite the many positives, the market prices EGY at 4.8-times trailing earnings. That’s just a steal.
United Microelectronics (UMC)
Based in Taiwan, United Microelectronics (NYSE:UMC) bills itself as the nation’s first semiconductor company. Today, it provides high-quality fabrication services, offering significant acumen in specialty technologies. Per its website, United Microelectronics serves all major sectors of the electronics industry.
Of course, two factors imposed headwinds on UMC’s business. First, we have the global supply chain disruption that particularly snarled the flow of semiconductors. Second, geopolitical tensions between Taiwan and China threatened to ensnare world powers in a global military conflict. However, with Beijing recognizing that Russia’s economy fell into recession recently, it’s doubtful that the leadership will be so stupidly brazen to start something.
That leaves investors to focus on what makes UMC one of the millionaire-maker stocks to buy. Primarily, I’d point to just how incredibly undervalued it is. Priced at 7.4-times forward earnings, this bad boy is cheap. Also, the company features an ROE of 26%, making it a very high-quality business.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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