With thousands of publicly traded securities available, it’s inevitable that more than a few names will classify as under-the-radar stocks to buy for discerning investors. I don’t say this to cast aspersions on any market expert. Rather, it’s just a fact of life: people can’t be all things at all times.
Still, this framework opens doors of opportunities for those interested in potentially robust stocks to buy. First, market ideas that fall far away from the spotlight generally don’t receive much analyst coverage and/or retail trading volume. However, should circumstances start turning favorably, the wave could rush in, thus handsomely rewarding those who initiated positions early.
Second, under-the-radar stocks theoretically offer a higher margin of safety. For example, if a flavor of the week loses sentiment, the underlying security can tumble in a hurry. However, lesser-known ideas didn’t receive much fanfare anyways; thus, there might not be much to fall to.
Still, going off the beaten path carries risks of business unpredictability, among other headwinds. If you can accept that, perhaps these stocks to buy should be on your watch list.
Stocks to Buy: Cigna (CI)
Unquestionably, healthcare services provider Cigna (NYSE:CI) represents an incredibly relevant enterprise. At the same time, many investors refuse to consider it one of the stocks to buy because it’s incredibly boring. Plus, it has become surprisingly volatile. Since the start of the year, the CI stock slipped almost 16%. Much of the pain came as Wall Street digested its mixed second-quarter earnings report.
Still, the fallout in CI seems a bit overdone, making it one of the under-the-radar stocks. To be fair, Cigna’s three-year revenue growth rate (per-share basis) of 12.4% sits right on the median line of its industry. However, buyers would be getting a great deal for that top-line performance, with shares trading at only 0.44x trailing-year sales. In contrast, the sector median comes in at 0.68x.
Just as you might expect from a relevant enterprise, Cigna is consistently profitable, with a trailing-year net margin of 3.58% (above 68.42% of rivals). Nevertheless, the market prices CI at a forward multiple of 11.03x. As a discount to projected earnings, Cigna ranks better than 66.67% of the competition.
Archer-Daniels-Midland (ADM)
If we were speaking colloquially, I’d say that multinational food processing and commodities trading firm Archer-Daniels-Midland (NYSE:ADM) sells itself, with some choice colorful phrases thrown in there for good effect. At the end of the day, no matter how advanced we as humans get, we’ll still need nourishment to thrive. On that note, ADM effectively operates as a permanently relevant enterprise.
Nevertheless, ADM incurred much choppiness throughout this year. Against the Jan. opener, shares find themselves down about 8%. Naturally, Russia’s invasion of Ukraine threw the global food supply chain for a loop, along with the sourcing of critical commodities. Still, food-related businesses should be long-term resilient just out of necessity.
Financially, ADM is also quite intriguing. Right now, the company prints a three-year revenue growth rate of 16.4%, ranked better than 76.9% of its peers. Despite this, shares trade at only 0.46x sales, ranked favorably lower than 72.41% of companies listed in the consumer packaged goods industry. Thus, it’s one of the under-the-radar stocks to buy.
Stocks to Buy: Titan Machinery (TITN)
An incredibly risky bet, based on its chart performance – or lack thereof – Titan Machinery (NASDAQ:TITN) doesn’t get the attention it deserves. Still, I believe it’s still one of the top stocks to buy for contrarians willing to take the adventurous path. As one of the largest U.S.-based dealers of agricultural and construction equipment, Titan commands permanent relevance.
With the growing domestic and global population, food resources have never been more critical. So, while Titan does have its issues – such as a cash-to-debt ratio that sits at a lowly 0.06x – the broader fundamentals should make up for it. However, Wall Street doesn’t see it that way yet. Since the start of this year, TITN fell more than 27%.
However, Titan enjoys over the past three years a revenue and EBITDA growth rate of 18.4% and 46.2%, respectively. Both stats easily exceed their respective sector median stats. Yet TITN trades at only 5.87x trailing earnings without non-recurring items (NRI). As a discount to profitability, Titan ranks better than 83.46% of its peers.
Weyerhaeuser (WY)
An American timberland company, Weyerhaeuser (NYSE:WY) owns nearly 12.4 million acres of timberlands in the U.S., per its public profile. In addition, it manages an additional 14 million acres of timberlands under long-term licenses in Canada. Plus, Weyerhaeuser features a long history of manufactured wood products. Frankly, it’s one of the top under-the-radar stocks to buy.
Right now, one of the biggest problems facing the consumer economy is the lack of affordable housing. More than just an individual financial burden, denying first-time homebuyers access to real estate may impose a generational crisis. Basically, it would disrupt the cradle-to-grave lifecycle of any society. But what could ease this problem? Building out more homes, which could richly benefit WY.
Not surprisingly, in my view, Weyerhaeuser features an impressive three-year revenue growth rate of 16%, beating out 90% of competitors. However, WY trades at only 2.98x sales, below the sector median of 6.31x. This bargain might not last for long.
Stocks to Buy: Brookfield Reinsurance (BNRE)
If you thought Cigna was boring as heck, check out Brookfield Reinsurance (NYSE:BNRE). A specialist in the namesake industry, reinsurance is “a way of transferring some of the financial risk that insurance companies assume when insuring cars, homes, people, and businesses to another company, the reinsurer,” according to Investopedia.
Again, it sounds like a snooze-inducing concept. Here’s what you really need to know. According to Allied Market Research, the global reinsurance market reached a valuation of $498.7 billion in 2021. Further, experts project that by 2031, the segment will hit $1.34 trillion. This represents a compound annual growth rate (CAGR) of 10.8% from 2022 to 2031.
To be fair, certain areas of Brookfield’s financials could use improvement. For example, its debt-to-equity ratio clocks in at 0.75x, unfavorably higher than the sector median of 0.25x. As well, its cash-to-debt ratio is only 0.85x. However, the company enjoys a net margin of 9.14%, beating out nearly 65% of its peers. Also, BNRE trades at only 3.73x operating cash flow, well beneath the sector median 7.92x.
World Kinect (WKC)
An energy, commodities and services firm, World Kinect (NYSE:WKC) operates in the natural gas and power spheres, per its public profile. However, it primarily focuses on the marketing, trading, and financing of aviation, marine, building and ground transportation energy commodities and related services. Thanks to its wide relevance, WKC ranks among the under-the-radar stocks to buy.
Unfortunately, WKC gets lost in the noise, with the market not appreciating the opportunity. To be sure, the company could use some improvements in its financials. For example, its cash balance relative to debt is rather modest, ranking worse than 60% of its peers. Still, the volatility impacting WKC – down over 17% since the Jan. opener and down nearly 23% in the past 365 days – seems a bit excessive.
After all, World Kinect features a three-year revenue growth rate of 19.4%, above 69.71% of sector rivals. Even with that performance, WKC trades at only 0.03x sales, which is practically subterranean. As a speculative bet among stocks to buy, it’s worth looking into.
VerifyMe (VRME)
Undeniably the riskiest idea for under-the-radar stocks to buy on this list, VerifyMe (NASDAQ:VRME) runs largely on its underlying narrative. However, it’s an exceptionally compelling one. Through its advanced brand protection platform, VerifyMe combines overt and covert technologies to limit and thwart the most sophisticated counterfeiting techniques. While it might not be the most popular topic, this nefarious activity is a critical one to address.
According to the U.S. Chamber of Commerce, counterfeit products cost the global economy over $500 billion a year. Further, with the rise in property crime negatively impacting companies both large and small, any effort to help the business community may go a long way. Naturally, this framework sounds appealing for VRME. However, over the past five years, shares stumbled 93%.
Financially, investment data aggregator Gurufocus warns its readers that VerifyMe could be a possible value trap. Certainly, it has a long way to consistent profitability. Still, for speculators wanting to take a potshot, this could be one of the stocks to buy.
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.
