Amid the rush of mainstream investments, certain jewels in the stock market scene frequently go undiscovered. These three overlooked stocks are promising, but many investors remain unaware. Comprehending and recognizing this potential broadens investment portfolios and provides avenues for noteworthy expansion opportunities. These businesses represent this untapped potential.
Understanding these businesses’ distinct advantages helps with investment decision-making and provides information on sector-specific growth tactics. Those looking for growth outside traditional alternatives can access these overlooked stocks that provide intriguing potential due to technical innovation, smart market positioning or sound financial management.
Harmonic (HLIT)
Harmonic (NASDAQ:HLIT) leads in distributed access architecture (DAA) and cable broadband equipment. The business is now leading the worldwide market share for all cable broadband equipment and has continued to lead the DAA category. At the CableLabs conference, they displayed their end-to-end (DOCSIS 4.0) solution, showcasing interoperability with numerous cable modems and rates of up to 9.4 gigabits per second. Its focus on optimizing broadband speed and cutting operational costs through AI is reflected in launching new products like the Beacon.
We have solid future revenue visibility with a record backlog and $677.8 million in deferred revenue. Their book-to-bill ratio of 1.2 indicates that they have a solid sales pipeline and solid demand. Despite declining sales, Harmonic increased its broadband segment gross margin to 47.5% in Q1 2024. This improvement was made possible by sharp cost control and product mix optimization, which increased the margin by 5.1% sequentially. Despite its technological leadership and market share in broadband equipment, Harmonic often flies under the radar due to its niche focus, making it an ideal stock among the most overlooked stocks.
Nexstar Media (NXST)
Nexstar Media (NASDAQ:NXST) is one of the U.S.’s largest local television station owners. In Q1 2024, the company’s net income increased considerably to $167 million, up $79 million or 89.8% over the previous year. Increased income, decreased operating costs (especially from The CW’s decreased amortization of broadcast rights), and a $40 million gain from the sale of their ownership stake in BMI were the main drivers of this improvement in profitability. The rise in net income margin from 7% to 13% indicates effective cost control and operational leverage, particularly noticeable when the revenue mix is enhanced.
Moreover, Nexstar’s operational edge and capacity to turn sales into earnings reflect its solid adjusted EBITDA margin of 42.2%. Revenue from political advertising came in at $39 million for Q1, a $31 million rise from the previous year. Nexstar may benefit throughout election cycles by achieving a mid-teens market share of overall political television expenditure. Despite its bottom line and dominant market position in local broadcast media, Nexstar Media is often ignored, making it a top pick on the overlooked stocks list.
Star Bulk Carriers (SBLK)
Star Bulk Carriers (NASDAQ:SBLK) operates in the dry bulk shipping sector. With an adjusted EPS of $0.87, the company recorded an adjusted net income of $73 million in Q1 2024. There is a net income of $75 million in the quarter. Moreover, the company’s adjusted EBITDA of $123 million for Q1 reflects its operational success. Star Bulk is flexible and has a solid cash position. There is $472 million in total liquidity. A core part of Star Bulk’s model is its focus on providing value through dividends and share buybacks.
Further, the company has a quarterly dividend of $0.75 per share for Q1. Since June 2021, there have been thirteen consecutive dividend payments. Star Bulk has distributed nearly $1.2 billion in dividends during this period, indicating a solid dividend policy. Additionally, the company has strategically set aside $423 million for share buybacks since 2022, utilizing the state of the market to boost and optimize its capital structure.
Finally, despite their profitability and solid liquidity position, Star Bulk Carrier is one of the most overlooked stocks due to the shipping industry’s cyclical nature and specialized focus.
On the date of publication, Yiannis Zourmpanos 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.
