There are many under-the-radar stocks quietly building empires that stock investors should know about. These are the types of relatively unknown firms that create wealth for investors. However, as a result of being unknown, most investors have no idea of their virtues.
A few of the names discussed below are somewhat well-known but none are household names in my mind. Each of these firms offers investors a lot to like and by getting in early the same investors can profit handsomely.
It’s worth noting that the biggest company names today were all once under-the-radar stocks as unknown companies brimming with potential. We’re really talking about the essence of bargain hunting in the stock market. I believe every investor wants to find hidden gems before the broader market does. There’s something about being able to say you invested in a company before it blew up that he’s appealing to everyone. Let’s look at several companies that currently exhibit that potential.
Celsius Holdings (CELH)
Celsius Holdings (NASDAQ:CELH) is an emerging energy drink company that has garnered some attention but remains unknown at the same time. While many consumers are familiar with the brand it is not a household name by any means.
It is however a company that continues to quietly build an energy drink empire. The stock itself had recently gotten very hot as many investors began to queue in on its growth and overall strong performance. It has also been very volatile in 2024 swinging between highs near $100 on two occasions and subsequently falling back into the $50s several times.
The most recent decline followed a research note from Morgan Stanley suggesting that Celsius would suffer a modest market share decline. Yet Celsius also saw revenues increase by nearly 36% during the first quarter while gross margin rose above 50%. Perhaps Celsius will suffer as more competitors enter the energy strength space but as it stands now, Celsius also benefits from strong pricing power based on those gross margins.
Ulta Beauty (ULTA)
Ulta Beauty (NASDAQ:ULTA) is an interesting potential choice among under-the-radar stocks. The stock itself has performed extraordinarily well over the past 5 years only to suffer more recently.
The reason is fairly straightforward: Ulta Beauty operates in a growing high-value beauty segment full of competition. Increased competition has forced the company to Revise its full-year forecast down slightly. That said, Ulta Beauty continues to deliver strong earnings that outpaced analyst expectations in the most recent quarter.
Furthermore, Ulta Beauty is debt-free and has a $1 billion share buyback program that should deliver shareholder value moving forward. The point here is that although Ulta Beauty operates within a tough beauty sector and faces stiff competition outwardly, the company is still well run. That suggests to me that Ulta Beauty can rebound and deliver returns to investors while continuing to build its empire. Don’t underestimate the fact that Ulta Beauty is debt-free. Being debt-free allows the company all sorts of latitude that other competitors don’t enjoy.
Deckers Outdoor Corporation (DECK)
Deckers Outdoor Corporation (NYSE:DECK) is a stock and company that a lot of people will be entirely unfamiliar with. By simply looking at its name alone one might guess that the company sells camping goods or maybe even decks for houses.
It’s actually a footwear company and owns both the UGGs and Hoka brands. The company owns other Footwear Brands but it is UGGs and Hoka that are propelling the company’s empire forward. Sales of those two brands accounted for nearly $900 million in revenues in the fourth quarter alone. The company reported a record $4.2 billion in revenues for the full fiscal year 2023. Gross margins rose above 56% from 50% prior. Earnings per share increased by 51% during the same period.
Deckers Outdoor Corporation is very much unknown and strongly exemplifies what it is to be among under-the-radar stocks quietly building an empire. The strength of Hoka and UGGs should continue to benefit shareholders moving forward.
Arm Holdings (ARM)
Arm Holdings (NASDAQ:ARM) is something of a behind-the-scenes player in the semiconductor sector and a stock worth buying.
The company designs the CPUs, GPUs, and other chip components that remain vital to the semiconductor industry today. It then licenses that intellectual property to other chip companies which can customize to their specific needs. ARM also sells software that allows developers to customize its processors.
Being so heavily involved in the semiconductor sector of course means that Arm Holdings is an artificial intelligence play. That has also raised questions regarding its valuation which is currently close to a high target price. I wouldn’t worry too much about the valuation concerns, instead focusing on the fact that the company is expected to provide 20% or greater top-line growth for the next several years while also drastically increasing earnings this year and into the future. Arm Holdings continues to be like other smart, under-the-radar stocks in the AI chip opportunity.
Cloudflare (NET)
Cloudflare (NYSE:NET) Is a popular stock choice in the growing cybersecurity sector. The company is quietly becoming one of the go-to choices for all things related to internet security.
Moreover, NET is well known for all kinds of security-related services including the prevention of Distributed Denial of Service (DDoS) attacks. The company also stores website content on its servers located in more than 320 cities globally. Generally speaking, Cloudflare is becoming better known, especially in light of growing concerns around security and artificial intelligence. That provides the company with a strong opportunity to grow and improve fundamentally.
The company indeed looks to be hitting its stride from a fundamental perspective. historically, the company has not provided net earnings overall in any given fiscal year. that is expected to change in 2024 when earnings per share will swing from -55 cents to 64 cents. Earnings are expected to continue to improve while top-line growth approaches 30% over the next several years.
PDD Holdings (PDD)
PDD Holdings (NASDAQ:PDD) is one of the best under-the-radar e-commerce plays available to investors anywhere. The company owns the Chinese discount shopping app Pinduoduo and a growing Temu marketplace that is quickly becoming an empire.
In the first quarter of this year, revenues more than doubled to the US dollar equivalent of $12.02 billion. Net income more than tripled, growing by 246% during the same period to $3.87 billion.
Yet PDD Holdings continues to be undervalued on broader fears related to the Chinese economy. While the Chinese economy is certainly facing its share of trouble it is obvious that the e-commerce sector continues to offer plenty of opportunities. PDD Holdings is very clearly capitalizing on that opportunity and makes a lot of sense at the moment.
The company also recently introduced a consignment model that pushes logistics costs onto merchants. That should serve to further boost earnings at the already thriving company.
Roblox (RBLX)
Roblox (NASDAQ:RBLX) will continue to grow due to the versatility of its platform. In turn, its stock should continue to grow as the company builds its empire.
Roblox is available for use on PCs, smartphones, tablets, and the Xbox. The creator content-driven platform offering millions of experiences is available to a broad user base. It appeals to developers who leverage that platform to create unique experiences hosted on the platform. Meanwhile, the platform also allows social experiences that drive engagement and appeal especially as life moves more online.
Revenues at Roblox are expected to rise by 47% overall in 2024. Sales are expected to double between 2023 and 2026. The platform is undergoing a period of rapid growth. That growth is the primary reason to invest in the company which projects to continue to produce losses for the next several years. The other thing to note about Roblox is that there must be incredible experiences housed on the platform that have simply gone unnoticed to date. It’s a treasure trove of experiences that could become popular moving forward.
On the date of publication, Alex Sirois 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.
On the date of publication, the responsible editor did not have (either directly or
indirectly) any positions in the securities mentioned in this article.
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