There are thousands of stocks for investors to choose from, many of which are undervalued stocks despite consistently outperforming the market. Typically, the same companies get attention from analysts, investors and the business press. Tons of ink is spilled writing about mega-cap tech stocks such as Amazon (NASDAQ:AMZN) and Apple (NASDAQ:APPL). At the same time, almost no mention is made of small-capitalized stocks that offer superior returns to investors.
This is a shame as investors are missing out on stocks of great companies with a consistent track record of outperformance, are attractively valued and pay dividends to their shareholders. Often, these overlooked stocks are smaller companies operating in sectors viewed as uninteresting or dull. But nothing is boring about doubling one’s capital. Shhh! Here are three secret stocks flying below Wall Street’s radar.
Mueller Industries (MLI)
Mueller Industries (NYSE:MLI) is the type of old school, small-cap stock that Wall Street and most investors completely ignore. Founded in 1917 and based in Tennessee, Mueller Industries makes copper, brass, aluminum and plastic products mostly used in plumbing, refrigeration and industrial applications, including water drainage. The company employs about 4,500 people, its current CEO has been in place since 2009, and the stock’s market capitalization is $6.5 billion.
Despite its relatively small size, Mueller Industries has operations throughout North America, Europe and Asia, from England to China. And the stock has been an absolute winner, gaining 24% this year, rising 59% over the last 12 months, and increasing 285% through five years. Despite the growth, the valuation on MLI stock is attractive, trading at 11 times future earnings estimates and with a quarterly dividend of 20 cents a share, good for a yield of 1.38%.
Despite all its success, only one analyst follows Mueller Industries. Until recently, no analysts followed the stock. That’s a shame, especially as the company reported Q1 earnings and the stock rose 7% in a single trading day.
IES Holdings (IESC)
Now for a super successful stock that no analysts follow. That would be IES Holdings (NASDAQ:IESC). Another small-cap stock based in the south focused on industry, IES Holdings, used to be known as Integrated Electrical Services. Founded in 1997, the company was, at one point, the most significant electrical contractor in the U.S. Due to rapid growth, it ran into financial problems and filed for bankruptcy protection in 2006.
Rebranded, restructured and having sold off a subsidiary, the electrical services firm emerged from bankruptcy, and IESC stock has been on fire ever since. The share price has grown 663% in the last five years, including a 208% increase in the previous 12 months. Already in 2024, the stock is up 74%. The company now employs 8,000 people who provide electrical installation and services to data centers, residential houses and industrial facilities. There’s a high concentration of insider ownership at IES Holdings.
Sadly, not one analyst covers the company, and it gets almost no media coverage. Yet investors fortunate enough to invest in IESC stock are rewarded with huge gains.
Eagle Materials (EXP)
Eagle Materials (NYSE:EXP) gets a little more attention than the other names on this list. Currently, eight analysts offer ratings and price targets on EXP stock. Still, most people reading this article have likely never heard of Eagle Materials. As with Mueller Industries and IES Holdings, Eagle Materials is an older company based in the south that is an industrial play. Texas-based Eagle Materials produces building materials such as cement, concrete, gypsum and sand for hydraulic fracturing in the oil industry.
While its business might not be exciting, it has proven lucrative for shareholders. EXP stock has nearly tripled in price over the last five years, including a 73% gain in the last 12 months. Since January of this year, the stock is up 30%. The analysts covering the company currently have a “strong buy” rating on the stock and a median price target of 12% above current levels. EXP stock trades at 18 times future earnings estimates and pays a quarterly dividend of 25 cents a share for a yield of 0.39%.
On the date of publication, Joel Baglole 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.
