Success at investing may have more to do with “time in the market” than “timing the market,” but on occasion, getting into a particular stock at the right time can be a very profitable move. With this, there’s merit in research what are the best little-known stocks to buy.
Now, not every little-known, under-the-radar stock is a diamond in the rough, just waiting to be bought. There are plenty of obscure stocks that aren’t even worth buying a speculative “moon shot” type wager.
Also, there are plenty of names that could be considered “hidden gems,” yet are too small and not liquid enough to make a meaningful investment in, depending on your portfolio size.
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However, taking a look at unnoticed stocks of fairly noticeable sizes, such as within the small cap stocks category (stocks with market caps between $300 million and $2 billion), quite a few names stand out.
For instance, these seven little-known stocks to buy. Each one represents good value, and has the potential to generate strong returns, whether through price discovery, company-specific catalysts, or other factors like “return of capital” efforts (buybacks and dividends).
Accel Entertainment (ACEL)
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Based in Burr Ridge, Illinois, Accel Entertainment (NYSE:ACEL) is America’s largest operator of distributed gaming terminals. Operating in numerous U.S. states where such terminals (placed in bars, restaurants, and other retail locations) are legal and regulated, Accel has carved out a niche in the gambling sector.
That said, while those in the know are aware of its strengths, and ACEL stock has performed well over the past year (up by over 21%), shares remain relatively obscure compared to other casino gaming stocks. Of course, this relative obscurity works in your favor, if you have stumbled on the stock today.
Trading for only 13.2 times forward earnings, Accel is expected to report steady growth over the next year. Over a longer time frame, as more states introduce distributed gaming as a means to generate more tax revenue, market leader Accel stands to benefit greatly.
Costamare (CMRE)
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Costamare (NYSE:CMRE) owns and charters out containerships and dry bulk vessels. Shipping is a cyclical, “feast or famine” type business. This is why CMRE trades at a very low price-to-earnings (or P/E) ratio (4).
However, while earnings for the sector can oftentimes be volatile, there may be a good chance that earnings for Costamare remain elevated for the foreseeable future. Why? As InvestorPlace’s Stavros Tousios detailed last month, conflict and tensions in the Red Sea have been a boon for freight rates.
With little end in sight to the conflict, this favorable trend may continue. In turn, if high earnings prove to be more than a “one and done” event, CMRE stock could experience multiple expansion. Perhaps, even climb back to its prior high-water mark ($15.73 per share, or 40.7% above current prices). With this, consider it one of the best little-known stocks to buy.
Ensign Group (ENSG)
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Most of the under-the-radar stocks discussed above and below are in the value stocks category, but Ensign Group (NASDAQ:ENSG) is a growth stock, sporting a growth stock-like forward earnings multiple (23.3).
Yet while ENSG stock is relatively pricey, paying up for this little-known operator of skilled nursing facilities could prove to be a very profitable investment in hindsight. As I argued late last year, by capitalizing on the aging of America trend, Ensign Group is poised to continue experiencing steady growth in the coming years.
In large part, via its strategy of acquiring existing facilities for its portfolios, then turning them around. Over the past year, strong results and price discovery have led to big gains for ENSG (up 39.2% during this time). Even so, there’s still time to buy, before the market becomes fully aware of it, and re-rates it yet again to the upside.
Griffon Corporation (GFF)
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Griffon Corporation (NYSE:GFF) has more than doubled in the past year, but remains one of the best little-known stocks to buy. This holding company owns numerous subsidiaries, including garage door manufacturer Clopay, toolmaker AMES Companies, and closet systems maker ClosetMaid.
Since 2013, Griffon has been focused on maximizing shareholder value. How? By selling off less profitable business, then using the proceeds to make accretive acquisitions. This has resulted in a big jump in earnings for Griffon. In turn, sending GFF stock soaring to new highs. Yes, at first it may seem like the market has already discovered Griffon.
However, buying in today may still prove worthwhile. As the company continues to implement its business strategy and garnering increased attention from the market, shares could experience further multiple expansion. Trading for a relatively inexpensive 15.2 times forward earnings, a re-rate to a P/E in the low-20s may be attainable.
Hibbett (HIBB)
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Shares in sporting goods retailer Hibbett (NASDAQ:HIBB) took off during the pandemic era, and pulled back sharply during the 2022 slowdown, but since late 2023, HIBB has surged back towards its past highs. However, don’t assume you missed the boat.
It’s not as if HIBB stock has become overvalued following this big run-up. Shares still trade for under 10 times forward earnings. Furthermore, key strengths remain in motion for Hibbett. As I argued last fall, the company’s focus on geographic markets not served by rival sporting goods retailers gives it a competitive advantage.
Add in other catalysts, like Hibbett’s rewards program partnership with Nike (NYSE:NKE), and it’s clear that HIBB remains well-positioned to continue reporting strong fiscal results. This in turn could help bridge the valuation gap between Hibbett and its pricier peer Dick’s Sporting Goods (NYSE:DKS). DKS currently trades for 14.6 times forward earnings.
Turning Point Brands (TPB)
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Turning Point Brands (NYSE:TPB) is another of the little-known stocks to buy that I’ve been bullish on in the past. TPB has attracted a lot of attention for its exposure to the cannabis sector (through its Zig Zag rolling papers brand), yet the company’s main business is tobacco.
Turning Point’s smokeless tobacco business (Stoker’s) has been a material contributor to growth and profitability, as seen in the company’s latest quarterly results. The market continues to shun tobacco stocks, and TPB stock is no exception. Like its larger peers, shares trade at a low valuation (8.7 times forward earnings).
However, as a Seeking Alpha commentator recently pointed out, there’s a catalyst that could not only drive earnings growth, but also drive a re-rating for shares. That would be Turning Point’s move into the nicotine pouch space, a market expected to grow 35.7% each year between 2023 and 2030.
Village Super Market (VLGEA)
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Village Super Market (NASDAQ:VLGEA) is not exactly a “get rich” type of stock. I wouldn’t expect shares in this owner/operator of ShopRite branded supermarkets to make “to the moon” type moves, whether on a short or long time frame.
However, if you’re looking for good value, and the opportunity to generate steady gains, VLGEA stock may be a strong choice. Trading at a super-low 7.7 times forward earnings, VLGEA can’t get much cheaper. In addition to being undervalued, the stock also provides investors with consistent gains via its 3.8% dividend.
While perhaps at best a “value is its own catalyst” type of opportunity, it’s not if there are zero potential catalysts. The recent surge in earnings could result in a long-awaited increase for the dividend. Village Super Market could also use its increased cash flow to buy back its undervalued stock. Or, to make new acquisitions.
On the date of publication, Thomas Niel 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.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.
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