business

7 unknown stocks to invest in before they hit the big time


It remains to be debated whether the overall stock market has bottomed, but many stocks have clearly become oversold. This is the case for many unknown and little known actions. Therefore, there are now many unknown stocks to invest in that can climb hugely.

These types of stocks, which are mostly small and micro cap names, are generally not tracked by many analysts. These under-the-radar names are also too small for many institutional investors to consider. Because of these two factors, these stocks often tend to be mispriced.

It can take a long time for the market to determine fair prices for under-tracked stocks. As a result, small investors have plenty of time to uncover these hidden gems before they take off.

Undervalued and undervalued, these seven unknown stocks offer investors great opportunities. Once the bull market returns, all could rally hugely.

ACTG Acacia Research $4.03
ALTO Viola Ingredients $3.79
HDSN Hudson Technologies $6.82
KTEL KonaTel $1.29
NLCP NewLake Capital Partners $14
PLCC Preformed line products $72.40
THRY Thryv Holdings $22.95

Acacia Research (ACTG)

Acacia Research (NASDAQ:ACTG) is what is called a net operating loss (NOL) shell. For several years, Acacia’s goal has been to monetize the tax deductions it accumulates by losing money. It achieves this goal by buying cash-generating assets and businesses.

ACTG stock has soared in 2021, thanks to its successful investments in the biotech space. Over the past year, however, shares of Acacia have fallen. At first glance, it might seem like the company’s good days are behind it. But this conclusion may not be correct.

Acacia is currently negotiating with its main shareholder, starboard value, to get more capital from Starboard. Their plan is primarily for Starboard to exercise its warrants to purchase shares of ACTG.

If Starboard exercises its warrants, Acacia will have the ability to pursue larger transactions. And larger deals could raise ACTG’s profile, helping boost its stock price, which is currently valued below the company’s book value.

Alto Ingredients (ALTO)

Viola Ingredients (NASDAQ:ALTO) is a manufacturer of industrial alcohols and fuel-grade ethanol. A sharp increase in ethanol prices, along with a shift to specialty alcohol production, significantly increased Alto’s profitability.

While these factors caused ALTO stock to parabola at the end of 2020, since 2021 the stock has seen mixed performance. The few market players following Alto are unsure whether the company’s long-term strategic plan to become a more profitable specialty liquor maker will succeed.

However, Alto management appears confident that the company will continue to post strong results. Alto plans to return much of its recent profits to its shareholders through a $50 million share buyback program.

Trading at just 12.3 times earnings, Alto shares have plenty of room to maneuver if the company manages to boost profit margins.

Hudson Technologies (HDSN)

It may be an exaggeration to say that Hudson Technologies (NASDAQ:HDSN) is an unknown stock, since shares of this refrigeration services company have more than doubled in the past year.

Yet, even though some investors have already taken notice of HDSN, that does not mean that the stocks are valued correctly. Although Hudson’s earnings are expected to fall next year, its shares today trade at just seven times analysts’ average estimate of earnings per share for 2023. That valuation would make sense if that company’s earnings were on track to continue to decline over the next few years.

But as Looking for Alpha commentator argued in August that changes to federal environmental regulations would boost Hudson Technologies’ financial results. These changes will allow the company to continue to post strong results, boosting shares and potentially allowing them to climb 100% or more.

KonaTel (KTEL)

Despite the large gathering of KonaTel (OTCMKTS:KTEL) as of 2020, KONA, which provides government-subsidized mobile phone and data services, remains one of the best unknown stocks to invest in. While stocks have risen more than 20x since 2020, so far they have only caught the eye of a small number of retail investors.

However, this could change over time. Operating in a recession-resistant niche industry, KonaTel could continue to grow at an above-average rate, increasing its profitability and allowing KTEL stock to rise even further.

And as the company grows, it may decide to transfer its shares from the over-the-counter market to a major exchange such as the Nasdaq. This would make it more visible to investors, which would increase its valuation.

NewLake Capital Partners (NLCP)

With the legalization of marijuana in several US states, a new type of real estate has emerged: industrial space used for the production of pot. As a result, several cannabis-themed real estate investment trusts (or REITs) have sprung up.

Innovative industrial properties (NYSE:IIRP) is the best-known, but relatively unknown REIT NewLake Capital Partners (OTCMKTS:NLCP) may be the best buy. With its recent dividend increase, NLCP’s forward dividend yield is now close to 10%. IIPR stock, on the other hand, has a forward yield of around 7.4%.

NLCP trades at a price-to-funds-from-operations (P/FFO) ratio of just 9.4 times, compared to 12.2 times for IIPR. One way for NewLake to close this valuation gap is to move its shares from the OTC market to a major exchange.

The continued legalization of pot by US states and possibly the US federal government may also boost this under-watched specialty REIT.

Preformed Line Products (PLPC)

Preformed line products (NASDAQ:PLCC) manufactures anchoring and control hardware products for the telecommunications and utility industry. A low-key company in a boring industry, PLPC unsurprisingly doesn’t get much buzz.

The preformed is not currently covered by any Wall Street analyst. These factors work to your advantage, as you can buy PLPC shares at their current low valuation of eight times earnings, as the market remains largely unaware of its long-term potential.

PLPC is in fact very exposed to the rise of electric vehicles (or EVs). As one online commenter argued, PLPC is a “backdoor EV game”. Indeed, the mass adoption of electric vehicles will require an expansion of the US electric grid.

This, in turn, will create a strong demand for Preformed line products, allowing its profits to continue to grow and increasing PLPC’s stock.

Thryv Holdings (THRY)

From mid-2021 to early 2022, Thryv Holdings (NASDAQ:THRY) has become much better known. Indeed, the market began to take notice of the metamorphosis of this telephone directory publisher into an enterprise software company and increased its shares.

Unfortunately, due to this year’s recession worries, THRY stock has fallen and few people are talking about it. However, as its latest financial results show, Thryv continues to transform. Indeed, its former business continues to generate positive cash flow which it uses to fund the growth of its software-as-a-service (SaaS) platform.

Meanwhile, the SaaS business continues to grow. Last quarter, its total SaaS revenue jumped 26% year over year. If Thryv can continue to “thrive” despite a looming recession, those who are already familiar with THRY stock may regain confidence in its transformation. Plus, more investors could get to grips with this under-the-radar SaaS game, pushing its shares to new heights.

On the date of publication, Thomas Niel held long positions in ACTG and THRY. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.

InvestorPlace.com contributor Thomas Niel has been writing individual stock analysis for online publications since 2016.

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