In this article, we discuss 12 under-the-radar stocks that are on the move. If you want to see more stocks in this selection, check out 5 Under-the-Radar Stocks That Are on The Move.
Valuations in the US equity market appear overstretched in the aftermath of stocks registering one of the best runs in the first six months of the year. Consequently, the race for stocks likely to deliver better-than-expected gains heading into yearend is heating up. The likes of Visa Inc. (NYSE:V) and Mastercard Incorporated (NYSE:MA) are increasingly emerging as some of the best plays as they show signs of breaking out after rallying to 52-week highs.
The impressive run in the market depicted by the S&P 500 rallying by more than 19%, Nasdaq by more than 30% year to date has been fueled by stocks that enjoy mass support. In addition, the stocks behind the rally are mostly of companies with unique elements of reliability and predictability. Unknown to most people is that under-the-radar stocks on the move could deliver better-than-expected gains because of their lack of predictability.
It's common for investors to get hung up on big boys like Apple Inc. (NASDAQ:AAPL), Amazon.com, Inc. (NASDAQ:AMZN) and Meta Platforms, Inc. (NASDAQ:META) as they receive the biggest share of Wall Street attention. Therefore, their stock prices tend to react instantly, even on the smallest news.
However, if you do not have an informational edge over other investors, generating value from the stocks might be difficult. Additionally, the initial investment capital in some of the stocks is usually high as some trade at a premium.
To compensate for this mishap, it is common for investors to seek haven in under-the-radar stocks that are often not given the much-needed attention. While some are in less known industries, some are of smaller companies with solid, long-term prospects.
While investing in under-the-radar stocks, having a long-term mindset to safeguard one's holdings from temporary headwinds is better. Additionally, such stocks offer a great way of diversifying an investment portfolio.
Investing in under the radar stocks offers a great opportunity to invest in companies before they become household names. The investment can pay off on getting in early before the heard joins and fuels a significant move to the upside.
The best under-the-radar stocks are mostly companies with a competitive edge, be it in the financial sector, tech, all even the industrial sector. For instance, some stocks were able to navigate the banking crisis early in the year to generate significant returns. On the other hand, stocks are well poised to do, even with the US economy's recession.
12 Under-the-Radar Stocks That Are on The Move
Source: Unsplash
According to CIC Wealth Executive Vice President Malcolm Ethridge, Mastercard and Visa are some of the stocks that sit well in the financial sector as they handle almost every credit card transaction in the US. While the focus has been on JPMorgan, especially on delivering better-than-expected Q2 results, Malcolm believes the two-payment processing company boasts a recession-proof model as they are embedded in every transaction worldwide.
While investing in any stock, it's vital to look beyond the company's share price at that moment. The focus should always be on the underlying business at hand and its long-term prospects. Therefore, there might be better under-the-radar stock than the best under-the-radar stock. Instead, it is of companies with strong leadership, competitive advantage in their respective industries, strong financials, and solid paths to future growth.
Our Methodology
We used Finviz's stock screener to select the 12 under-the-radar stocks. We chose the stocks that are near their 52-week highs and have Upside Potential. These companies have strong potential and performance and can be great investment opportunities. We also checked hedge fund sentiment for each stock from our database of 943 hedge funds at the end of Q1. The stocks are ordered by the number of hedge funds holding them.
Reata Pharmaceuticals, Inc. (NASDAQ:RETA) is a biopharmaceutical company that develops and sells drugs. The company's stock soared by 175% this year after the FDA approved its first drug, Skyclarys, for a rare neurodegenerative disorder. The drug launched in the second quarter and received 500 patient start forms. The company stopped a phase 3 trial of another drug for kidney disease.
Analysts give Reata Pharmaceuticals, Inc. (NASDAQ:RETA) a Strong Buy rating, with an average price target of $122.43. This is based on 8 forecasts, which vary from $85 to $179. The stock is up by a whopping 199.95% year to date and is trading near it's 52 week high of $113.61.
Reata Pharmaceuticals, Inc. (NASDAQ:RETA) was a part of 31 hedge fund portfolios in Q1 2023, according to Insider Monkey’s database. The stakes owned by these hedge funds have a collective value of over $544.55 billion. Joseph Edelman’s Perceptive Advisors was one of the company’s largest stakeholders in Q1.
Weatherford International plc (NASDAQ:WFRD) is an American-Irish oilfield services company that offers innovative and digitalized energy services in 75 countries with 17,900 team members. The company reported strong results in the first quarter of 2023, with higher revenues, margins, net income, and adjusted free cash flow than the previous year.
Weatherford International plc (NASDAQ:WFRD) expects to grow its revenue by mid-teens and expand its margins by at least 250 basis points in 2023, despite some macro volatility and softness in North America.
Weatherford International plc (NASDAQ:WFRD) has a Strong Buy rating from 7 analysts, with an average price target of $91.43, implying a 24.48% upside from the current price.
As of the close of Q1 2023, 34 hedge funds tracked by Insider Monkey held stakes in Weatherford International plc (NASDAQ:WFRD), up from 33 in the previous quarter. These stakes have a consolidated value of $882.11 million. Donald Yacktman’s Yacktman Asset Management was the company's leading stakeholder in Q1.
Upside Potential: 16.94%Current Price as of July 20: $79.3052 Week High: $87.88Number of Hedge Fund Holders: 40
Hologic, Inc. (NASDAQ:HOLX) is a leader in the markets for women's health and diagnostics, which offer high growth and recurring revenues. The company's main businesses, such as breast health, surgical, and molecular diagnostics, are set to grow at double digits in the coming years, thanks to innovation, market expansion, and customer loyalty. Hologic's main businesses also generate high margins and cash flow, which allow the company to pursue growth opportunities and reward shareholders.
Analysts give Hologic, Inc. (NASDAQ:HOLX) a Moderate Buy rating, with an average price target of $92.73. Compared to the current price of $79.3, this means a 16.94% rise in value.
According to Insider Monkey’s first quarter database, 40 hedge funds were long Hologic, Inc. (NASDAQ:HOLX), compared to 39 funds in the last quarter. Cliff Asness’ AQR Capital Management is a prominent stakeholder of the company, with 986,533 shares worth $79.37 million.
Procore Technologies (NYSE:PCOR) has been flying high under the radar as a provider of cloud-based solutions targeting the construction industry. The stock is already up by about 55% year to date and trading near its 52-week high.
The renewed interest in Procore Technologies (NYSE:PCOR) stems from the company benefiting from the construction industry being the last to digitize. Its cloud-based solutions have proved to be a hit in the construction industry by helping customers manage, coordinate and optimize their projects. Consequently, the company expects its full-year revenue to increase by 40%.
After an impressive run in the market, analysts on Wall Street have an average price target of $78.50 on the stock implying a 9.22% upside potential from current levels.
According to Insider Monkey’s first quarter database, 41 hedge funds were bullish on Procore Technologies, Inc. (NYSE:PCOR), with combined stakes worth $824 million. 12 West Capital Management is a prominent stakeholder of the company, with 3.5 million shares worth $219.21 million.
Conestoga Capital Advisors made the following comment about Procore Technologies, Inc. (NYSE:PCOR) in its Q1 2023 investor letter:
“Procore Technologies, Inc. (NYSE:PCOR): PCOR is a market leader in cloud-based construction project management software sold to building owners, general contractors, and sub-contractors. The company’s software suite contains 13 different applications, most internally developed, that seek to connect all the stakeholders in a particular project. PCOR offers an open platform, and its software suite is integrated with over 350 different applications. There is a strong need for PCOR’s products given that it is estimated that 35% of all a contractor’s time is wasted on rework, (96% of all construction data not used) and conflict resolution.”
Shortages in the resale market have seen most homeowners resort to new home construction stocks. Consequently, DR Horton Inc. (NYSE:DHI) has turned out to be one of the hottest stocks in the homebuilder segments rallying by more than 40% year to date.
Demand for new homes is on the rise, helping strengthen the company's prospects in these segments. Zoning restrictions and a drop in new housing have seen demand outpace supply, a move that is making DR Horton generate significant returns from its investments.
While this stock is up by about 40% year to date, analysts on wall street have an average price target of $130.67, implying the stock has a 4.10% upside potential from current levels.
At the end of the first quarter of 2023, 46 hedge funds in the database of Insider Monkey held stakes worth $1.31 billion in DR Horton Inc (NYSE:DHI), the same as in the previous quarter, worth $1.33 billion. Among these hedge funds, Edgar Wachenheim’s Greenhaven Associates is the company’s most notable stakeholder, with 3.65 million shares worth $356.8 million.
Blue Tower Asset Management made the following comment about D.R. Horton, Inc. (NYSE:DHI) in its first quarter 2023 investor letter:
“This quarter, we exited our homebuilder stocks of Lennar (NYSE:LEN) and D.R. Horton, Inc. (NYSE:DHI). While the companies have excelled since we invested, rising rates have caused contract cancellations to explode higher and their construction backlog to shrink significantly. Compared to the Q1 of the prior year, Lennar’s 2023 Q1 saw a 33% decrease in construction backlog and a 18% decline in new orders (by dollar value). The cancellation rate increased to 21% from 10% last year2. While both homebuilders are still quite profitable and well-run, we wanted to exit before they are impacted by an impending recession. We used the capital to buy shares of the Charles Schwab (NYSE:SCHW) which dropped in price due to the 2023 banking crisis.”
Berry Global Group, Inc. (NYSE:BERY) makes and sells engineered materials, nonwoven materials and consumer packaging. It has four segments: Consumer Packaging International, Consumer Packaging North America, Health, Hygiene & Specialties, and Engineered Materials. Shares of the company is up 10.19% year to date.
Analysts predict that Berry Global Group, Inc. (NYSE:BERY) will reach $74.22 in price. This is an average of their forecasts, which range from $64 to $87. Compared to the current price of $66.58, this means a 11.47% rise in value.
According to Insider Monkey’s first quarter database, 49 hedge funds were bullish on Berry Global Group, Inc. (NYSE:BERY), compared to 47 funds in the preceding quarter. Canyon Capital Advisors is the leading stakeholder of the company in Q1.
Caesars Entertainment, Inc. (NASDAQ:CZR) is a US company that runs casinos, hotels, and sports betting in 28 places. It also offers online gaming and other services. The stock is also up by about 33.98% year to date.
While trading close to its 52-week high of $57.86 a share, Caesars Entertainment, Inc. (NASDAQ:CZR) boasts of a high average price target of $65.56 representing an 15.69% upside potential from current levels.
In the first quarter, Insider Monkey's report indicated that 56 hedge funds had a positive outlook on Caesars Entertainment, Inc. (NASDAQ:CZR), holding a combined stake valued at $1.22 billion.
In its Q1 2023 investor letter, Baron Funds shared its perspective on Caesars Entertainment, Inc. (NASDAQ:CZR)with the following statement:
“Following a 50% decline in its share price in 2022, we re-acquired shares of Caesars Entertainment, Inc. (NASDAQ:CZR) in the first quarter. Caesars is the largest casino-entertainment company in the U.S. and one of the world’s most diversified casino-entertainment providers. The company operates primarily under the Caesars, Harrah’s, Horseshoe, and Eldorado brand names. The company generates approximately 50% of its cash flow from Las Vegas and 50% of its cash flow from regional destination markets. The company owns approximately half of its real estate and leases the other half from gaming REIT companies – Gaming and Leisure Properties, Inc. and VICI Properties Inc.…” (Click here to read the full text)
