Stealthy Superstars: 3 Under-the-Radar Stocks to Invest in Now
In general, a company’s stock tends towards fair valuation as awareness about it increases. Further, a stock is certain to get overvalued when everyone is talking about it or interested in buying. Therefore, it’s the under-the-radar stock picks that are worth buying as they are yet to get the attention they deserve, which results in a valuation gap.
It’s not uncommon for the investment community to miss potential multibagger stocks of the thousands of stocks listed. This column focuses on three unknown high potential stocks that can blast higher at any moment.
Given the valuation and the business outlook, I believe that these stocks can deliver 100% returns in the next 24 months. At the same time, these stocks are worth holding beyond this time horizon if business developments remain positive.
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Let’s discuss the reasons to be bullish on these under-the-radar stock picks.
Amcor (AMCR)
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Amcor (NYSE:AMCR) has struggled in the last 12 months with a downside of almost 20%. However, it’s among the under-the-radar stock picks that can be value creators. At a forward price-earnings ratio of 13.7, the stock looks attractive and offers a dividend yield of 4.91%.
As an overview, Amcor is a global leader in the consumer packaging industry. The company’s financial performance has been consistently strong, reporting 9% annualized earnings per share growth in the last nine years.
This growth is driven by the company’s consistent acquisitions and continued investment in research and development. This has supported EBITDA margin expansion with innovative products.
I also like the fact that Amcor has a strong global presence with North America, Western Europe and emerging markets being the growth drivers. Amcor expects to increase capital investments to 4% to 5% of sales, which will help in boosting revenue growth in the coming years.
Miniso Group (MNSO)
Source: shutterstock.com/Hendrick Wu
Miniso Group (NYSE:MNSO) stock has silently moved higher by 145% in the last 12 months. The stock remains largely unnoticed and trades at an attractive forward price-earnings ratio of 22.3. The company’s aggressive expansion and positive financial metrics make MNSO stock worth accumulating on corrections.
The financial metric that I find attractive is margin expansion. For Q2 2023, Miniso reported a gross margin of 40%, which was higher by 890 basis points on a year-on-year basis. Strong recovery in overseas markets was cited as one of the key reasons for margin expansion.
It’s worth noting that Miniso has 2,115 stores in overseas markets. On a year-on-year basis, the number of stores increased by 238.
With aggressive global expansion, I expect revenue growth coupled with higher margins. Presence in high-growth segments like the perfume market and a robust increase in “Top Toy” stores will also contribute to the growth momentum.
Scorpio Tankers (STNG)
Source: Shutterstock
Scorpio Tankers (NYSE:STNG) is a massively undervalued under-the-radar stock pick. At a forward P/E of 4, the stock looks poised to double in the coming quarters. Further, STNG stock offers a dividend yield of 7%.
As an overview, Scorpio is engaged in the seaborne transportation of refined petroleum products globally. With attractive time charter rates, the company has delivered strong quarters numbers in the recent past. For Q1 2023, Scorpio reported an adjusted EBITDA of $286.4 million, implying an annualized EBITDA potential of $1.2 billion.
With strong cash flows, Scorpio has increased dividends. At the same time, the company has reduced debt by $146.2 million in the first half of 2023. With a liquidity buffer of $804 million as of April, financial flexibility is high for dividends and share repurchase. Additionally, there is a strong case for fleet expansion in the coming quarters if the industry outlook remains bullish.
On the date of publication, Faisal Humayun did not hold (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.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored over 1,500 stock specific articles with focus on the technology, energy and commodities sector.
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