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5 Best Under the Radar Stocks to Buy (AMWD, FL, LCI, RYAAY, TAST)

Look through these "hidden gems" for value

You don’t have to own Apple (AAPL) stock to be considered a “good” investor.

 While big cap names are often popular with investors simply because investors “know” these brands, sometimes it’s the companies that no one knows about that provide the best long-term returns.

That’s why it pays to put together a screen for companies with solid Zacks Ranks and good fundamentals. You might be surprised at what comes up.

Finding Under The Radar Stocks

Zacks covers 4400 stocks. That’s a big universe.

How do you narrow down the list to only the best stocks, especially if you’re looking for companies that aren’t always in the news?

I started with a search of Zacks Rank #1 (Strong Buy) stocks. This narrowed the list down to just 224 stocks.

That’s more manageable.

Zacks’ Rank Buy #1 list also includes the Zacks Style Scores for Value, Growth and Momentum.

So you can search the 224 stocks by any of the style scores to narrow the list down even further.

I normally am a value investor, but today I wanted to find just the best darn companies I could with the best Zacks Rank.

If those were higher priced growth or momentum stocks, then so be it.

Branch Out

 There are great companies that are hidden gems. Look outside the usual box of the big name, big cap players.

 These 5 stocks are virtually unknown, yet their fundamentals are great. They are all Zacks Rank #1 (Strong Buy) and have Style Scores of A in at least one style.

 Two have Zacks Style Scores in Growth of A, one is an A in Value and two have Zacks Style Scores in Momentum of A. That’s not too shabby.

 Investors should look around. Break out of the comfort zone of the big, well known names. 4 out of the 5 listed below have crushed the return of the S&P 500 over the last 10 years, which included the Great Recession sell off.

 Apple’s not the only great stock investment of the last 10 years. You might be surprised at how many hidden gems are out there, if you only bothered to look….

Under the Radar Stocks to Buy: American Woodmark Corporation (AMWD)

American Woodmark (AMWD) is a $1.16 billion market-cap company that makes kitchen cabinets and vanities for the remodeling and new home construction markets in the United States.  It operates 9 manufacturing facilities and 7 service centers throughout the United States.

AMWD sells four brands: American Woodmark, Shenandoah, Timberlake and Waypoint. Home Depot (HD) and Lowe’s (LOW) sell its brands, as well as specialty kitchen and bath designers and distributors.

On August 20, it reported its fiscal first quarter 2016 results. Sales rose 9% to $231.2 million year over year as it saw growth in both dealer and new construction channels in the quarter.

Expected fiscal 2016 earnings growth of 32.4%
Forward P/E = 25
Zacks Style Score for Growth = A
Zacks Rank #1 (Strong Buy)
Over the last 10 years shares up 128.7%
Over the last 10 years S&P 500 up 74.1%

 

Under the Radar Stocks to Buy: Foot Locker (FL)

Foot Locker (FL) operates 3500 stores in 23 countries in North America, Europe, Australia and New Zealand under several well known name brands including Foot Locker, Footaction, Lady Foot Locker, Champs Sports, SIX:02, Runners Point and Sidestep.

It also operates web sites for all of its brands as well as Eastbay, which is a site for serious athletes.

Despite a market cap of nearly $10 billion, the company remains an after thought to most looking to invest in the athletic apparel craze. One of its strategic goals is to have company sales top $10 billion. At the end of fiscal 2014, sales were $7.15 billion, so it is well on its way.

Expected fiscal 2015 earnings growth = 18.3%
Forward P/E = 16.8
Zacks Style Score for Momentum = A
Zacks Rank #1 (Strong Buy)
Over the last 10 years shares up 265.4%
Over the last 10 years S&P 500 up 71.4%

Under the Radar Stocks to Buy: Lannett (LCI)

Founded in 1942, Lannett (LCI) makes generic prescription pharmaceutical products in tablet, capsule and oral liquid forms to customers throughout the United States in various therapeutic areas.

With a market cap of just $1.7 billion, it’s rare to find a small cap drug company that hasn’t been swallowed up by one of the larger companies.

On September 2, Lannett announced it was purchasing Kremers Urban Pharmaceuticals for $1.23 billion. The transaction will be funded through a fully committed term loan and cash on hand. The company expects it to be a transformational acquisition as it adds a highly profitable business that will diversify its product lines.

Kremers has 11 product applications pending at the FDA, of which 5 include Paragraph IV certifications. Longer term, it has growth potential with 17 product candidates in development.

Lannett believes the acquisition will be accretive to fiscal 2016 earnings in the mid-to-high single digits and in the 20% to 25% range in fiscal 2017.

Expected fiscal 2016 earnings growth = 0.6% (bigger growth expected in fiscal 2017 of 29%)
Forward P/E = 11.6
Zacks Style Score for Value = A
Zacks Rank #1 (Strong Buy)
Over the last 10 years shares up 838.4%
Over the last 10 years S&P 500 up 74.1%

Under the Radar Stocks to Buy: Ryanair Holdings (RYAAY)

Ryanair (RYAAY) is an Irish low cost airlines that flies throughout Europe.

With a market cap of $21 billion, it’s hard to believe it’s an under-the-radar stock but when American investors think of the airlines, they focus on the American brands such as Southwest.

Yet, in its fiscal 2016 first quarter, traffic jumped 16% year over year to 28 million passengers. Recently, the momentum has continued. In September, traffic grew 12% compared to a year ago with the load factor rising 4% to 94%.

90% of its fiscal 2016 fuel is hedged. It has also hedged 70% of 2017.

Ryanair has been giving back to shareholders. It pays a dividend, currently yielding 2.7% and has been buying back shares.

By the end of fiscal 2016, the airline expects to have a fleet of 340 B737-800s.

Expected fiscal 2016 earnings growth = -4.5% (but analysts expect EPS growth to rebound in F2017)
Forward P/E = 15.9
Zacks Style Score for Momentum = A
Zacks Rank #1 (Strong Buy)
Over the last 10 years shares up 207.8%
Over the last 10 years S&P 500 up 74.1%

Under the Radar Stocks to Buy: Carrols (TAST)

You may never have heard of this small cap restaurant company but Carrols (TAST) operates 650 Burger King (BKW) restaurants in 15 states.

It originally started operating Carrols Burger restaurants in the 1960s but in 1975, it entered into a franchise agreement with Burger King for the Northeast part of the United States. The Carrols branded stores were phased out and its been operating Burger Kings ever since.

On August 4, this Burger King operator reported second quarter results and saw comparable store sales jump 10.3% compared to a 2% decrease the year before.

 It has remodeled 350 of its stores in the last year and that is boosting sales. Additionally, the Burger King brand is hot as its marketing campaign is working to drive traffic.

Moderating commodity costs also helped.

Carrols raised its full year outlook, including its comparable store sales range to 5% to 7% from 3% to 5%. This is a brand, and a company to watch, as Burger King, under its new management team, seems to have some of its mojo back.

Expected 2015 earnings growth = 9.7%
Forward P/E = N/A
Zacks Style Score for Growth = A
Zacks Rank #1 (Strong Buy)
Over the last 10 years shares are down 14.5%
Over the last 10 years S&P 500 up 74.1%

 Want More of Our Best Recommendations?

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Tracey Ryniec is the Value Stock Strategist for Zacks.com. She is also the Editor of the Insider Trader and Value Investor services. You can follow her on twitter at @TraceyRyniec.

 Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CARROLS RESTRNT (TAST): Free Stock Analysis Report

RYANAIR HLDGS (RYAAY): Free Stock Analysis Report

LANNETT INC (LCI): Free Stock Analysis Report

FOOT LOCKER INC (FL): Free Stock Analysis Report

AMER WOODMARK (AMWD): Free Stock Analysis Report

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Article printed from InvestorPlace Media, https://investorplace.com/2015/10/5-best-under-the-radar-stocks/.

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