3 best stocks that aren’t on the Wall Street radar
Most of the stocks in most people’s portfolios are household names for a good reason – we tend to invest in companies that we see and buy from on a regular basis. And there is nothing wrong with that. But limiting our universe of selection of potential stocks to companies that we encounter on a daily basis ultimately limits our potential earnings.
With that in mind, here’s a look at three stocks that aren’t frequently discussed on (or by) Wall Street analysts, but still worth a closer look.
1. Global carrier
yes it’s the same Global carrier (NYSE: CARR) which manufactures heating and air conditioning equipment. It’s been around ages, but the stock itself is less than a year old, born from a fallout of Raytheon Technologies in April of last year, at the start of the pandemic. Analysts, as well as investors, had too many other things in mind at the time to give this company the attention it deserves, and that hasn’t changed much in the meantime. Despite its $ 32 billion market capitalization, only a handful of analysts follow Carrier.
Don’t let the lack of coverage fool you, however. Despite all the logistical headaches of the past year, the company’s revenue fell only 6%, while operating profits improved 24%. The carrier claims sales growth of around 5% this year, resulting in a 14% increase in earnings per share. Analysts model a little more growth, but more importantly, they model a similar rate of growth in revenue and bottom line through 2022.
However, the company has a trump card up its sleeve, which may well allow it to exceed those expectations. While unable to directly tackle the spread of viruses through HVAC systems, the COVID-19 pandemic has made air quality a concern for consumers as well as institutions. To that end, Carrier earlier this month launched an e-commerce site to sell air quality products online. And, he added indoor air quality consultations to his income directory. These could provide a nice boost to his overall business.
2. MercadoLibre
It is often described as the Amazon Latin America, and while this is a fairly accurate characterization, it is also an incomplete characterization. Free Mercado (NASDAQ: MELI) could also easily be described as the Pay Pal from Latin America. That’s because its Mercado Pago online payment platform is just as powerful as its well-known North American counterpart, if not more.
As a perspective, in its last published quarter – the third quarter of last year – MercadoLibre facilitated the sale of $ 5.9 billion (gross) in merchandise, but processed $ 14.5 billion ( again, gross) of digital payments. All of its operations combined generated $ 1.1 billion in revenue for the three-month period ending September, up 148% year-over-year; South Americans have also changed their spending habits, opting for online and contactless shopping whenever possible. That growth rate is expected to slow this year, but analysts still expect a strong double-digit improvement.
The deciding factor: The flood of new business brought on by the pandemic has pushed the company from red to black, where it appears to be staying.
So why isn’t Wall Street touting this incredible growth story? Geography has a lot to do with it. While professional stock pickers are ready to recommend foreign stocks, they are difficult to hedge well and often don’t attract the kind of follow-up that is worth it.
Don’t let this hurt you. MercadoLibre is always a name with lots of potential now that it is starting to merge several e-commerce companies in newly mature markets like Argentina, Brazil and Mexico.
3. Hasbro
Finally, add Hasbro (NASDAQ: HAS) to your list of stocks to consider even if Wall Street is not very interested.
If you’ve been keeping an eye on the toy maker for the past few years, you’ll know the company has struggled to stay relevant. The market has moved away from more conventional toys to digital toys, including video games. At the same time, the industry has become increasingly dependent on competitive licensing of characters featured in movie franchises like Star wars, Frozen, and Marvel Avengers. Much of the growth Hasbro has been able to generate in recent years has been the result of acquisitions rather than organic improvements in the sales of its brands like Nerf, GI Joe and Tonka. It is understandable that investor interest has waned.
However, that disinterest could turn into a costly missed opportunity, given Hasbro’s revitalization plans. These plans include the use of more media platforms already available to him.
The company has frequently licensed content to the streaming giant Netflix, but that partnership took it a step further last week when Hasbro announced its new My little Pony the film will bypass a theatrical release and debut exclusively through Netflix. Meanwhile, the toy company recently launched a dedicated GI Joe channel on YouTube. Beyond new media formats, Hasbro’s e-commerce platform Hasbro Pulse and its relatively young crowdsourcing company called HasLab may not yet be breadwinners, but they are drawing consumers into the world. digital ecosystem of the company.
The end result of these initiatives (and others) is respectable fiscal resilience in a challenging 2020, with solid sales and profit growth expected this year and next. Only followed by 15 analysts, Wall Street has not yet realized that it was not the Hasbro of yesteryear. Among analysts who follow the company, however, their consensus price target of $ 106 indicates stocks are undervalued by about 17%.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.