I have discussed hidden-gem stocks multiple times in the last few quarters. However, my discussion has largely focused on underrated growth stocks listed on the NYSE or NASDAQ exchange. I was screening through the OTC exchange, and there is a surprisingly big list of growth stocks for multibagger returns.
I, therefore, decided to focus exclusively on OTC-listed hidden-gem stocks in this column. In my view, the stories discussed have 5x to 10 return potential in the next five years. Being listed on the OTC exchange does not imply that these stocks are fundamentally weak. I expect current fundamentals to continue improving in the next few years.
It goes without saying that these stocks seem massively undervalued. Being undiscovered or underrated is the reason. Once in the limelight, the valuation gap will close.
Let’s talk about the reasons to be bullish on these three hidden-gem stocks.
Aker BP ASA (AKRBF)
Crude oil has corrected from its highs during recession fears. This is a good opportunity to accumulate high-quality underrated growth stocks. Aker BP ASA (OTCMKTS:AKRBF) is massively undervalued at a forward price-earnings of 10.4. The hidden-gem stock also offers a robust dividend yield of 9.84%.
As an overview, Aker BP has prized oil assets in the Norwegian Continental Shelf. To put things into perspective, Aker BP reported revenue and EBITDA of $3.3 billion and $2.9 billion, respectively, for Q1 2023. The production cost per barrel was at $7.2, and the company reported $1.7 billion in operating cash flows. Clearly, low-cost assets position Aker BP as a cash flow machine.
It’s also worth noting that the company closed Q1 with a liquidity buffer of $6.7 billion. Additionally, with an annualized OCF visibility of $7 billion and with a leverage ratio of 0.16, the company has high financial flexibility. This allows Aker to invest aggressively in its exploration pipeline.
I must add that OPEC and its allies have been cutting production. Once oil trends higher, this oil and gas growth stock will deliver multibagger returns.
Aker Carbon Capture ASA (AKCCF)
Aker Carbon Capture (OTCMKTS:AKCCF) is another Aker Group company stock that’s poised for multibagger returns. With the company providing products and technology in the field of carbon capture, the outlook is bullish.
It’s worth noting that the company’s proprietary technology has close to 60,000 operating hours. Hence, the company’s ready-to-use capture plants use case has been proven. For Q1 2023, Aker Carbon reported revenue of 287 million Norwegian krone. On a year-on-year basis, revenue increased by 99%.
I expect robust growth to sustain with the company having a strong order intake. As of Q1 2023, the order backlog was one billion Norwegian krone. It’s worth noting that Aker Carbon “will have secured contracts for carbon capture plants for a total of 10 million tonnes per year by the end of 2025.” With the company catering to several industries in the European region, the target seems realistic.
Curaleaf Holdings (CURLF)
Curaleaf Holdings (OTCMKTS:CURLF) stock has declined by 53% in the last 12 months. However, I remain bullish on the cannabis stock for multibagger returns.
An important point to note is that even without federal reforms, the U.S. cannabis market size is expected at $71 billion by 2030. States continue to legalize the adult use of cannabis, and Curaleaf is operating in 21 states.
For Q3 2022, Curaleaf reported revenue and EBITDA of $340 million and $84 million, respectively. On a consistent basis, the company has reported positive adjusted EBITDA. With operating leverage, Curaleaf will be well-positioned to deliver healthy cash flows in the coming years.
Another reason to like Curaleaf is its significant focus on research and development. Approximately 18% of Q3 revenue was generated from new products launched in the last 12 months. Currently, the company has 15 new products in the active pipeline. Additionally, more than 50 product concept ideas are in the front-end innovation process. New products will ensure that revenue growth remains robust.
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.
