When we think about the best stocks, we tend to think about well-known stocks. It’s unlikely that any investors haven’t heard about Tesla (NASDAQ:TSLA), Apple (NASDAQ:AAPL) and Alphabet (NASDAQ:GOOGL). These are just among the few big companies that have created value for shareholders on a sustained basis.
However, it’s not just the big names that can make your wallet heavy. There are lesser-known stocks or hidden gems that have the potential to deliver strong returns. These are stocks to buy before words gets out among the wider investor community.
In this column, I intend to discuss the four best stocks to buy that have been under the radar. A possible reason for these stocks being lesser known is the fact that these companies are not headquartered in the United States.
Let’s take a deeper look into these stocks and the reasons they are possible value creators.
- RADA Electronic (NASDAQ:RADA)
- Valneva SE (OTCMKTS:INRLF)
- Azure Power Global (NYSE:AZRE)
- Aptiv PLC (NYSE:APTV)
4 of the Best Stocks: RADA Electronic (RADA)
When we talk about stocks from the defense sector, names that come to mind are Lockheed Martin (NYSE:LMT) or Northrop Grumman (NYSE:NOC). However, an attractive small-cap that’s worth considering is RADA stock. It’s a hidden gem that has significant upside potential in the coming years.
Rada Electronic is a defense-technology company with a focus on tactical radar and digital video and data recorders. For FY2020, the company reported year-over-year revenue growth of 72% to $76.2 million.
With a strong order backlog, Rada expects current year revenue to be more than $120 million. It’s worth noting that for the first two months of the year, the company reported $15 million in new orders. Order intake during this period was 150% higher y-o-y.
Clearly, with the backlog growing, the company is positioned to deliver strong numbers. Rada believes that the mini-tactical radar market is worth more than $5 billion. This presents big growth opportunity.
As of December 2020, Rada Electronic reported cash and equivalents of $35.8 million. In March 2021, the company closed a public offering to raise $59.5 million. Therefore, the company is well-financed as it prepares for the next leg of growth.
Overall, RADA stock seems attractive at a current market capitalization of $550 million. It’s among the quality stocks to buy at current levels.
Valneva SE (INRLF)
Companies that are in the race for the vaccine against Covid-19 have been in the limelight. There has been ample discussion about comapny’s like Moderna (NASDAQ:MRNA), Pfizer (NYSE:PFE) and AstraZeneca (NASDAQ:AZN).
Covid-19 vaccine play INRLF stock has been relatively unnoticed. Valneva initiated Phase 1 and 2 trials in December 2020. The company also has signed a deal with the U.K. government that’s worth €1.4 billion (190 million vaccine doses).
Valneva is now in advanced discussion with the European Union for 60 million doses. With delivery of the vaccine expected to begin towards the end of the year, Valneva is positioned for strong top-line growth.
Besides this, Valneva has also initiated Phase 3 trials for the single-shot Chikungunya Vaccine. This is another potential growth trigger for the company. The company also has partnered with Pfizer on a vaccine for Lyme disease. This vaccine is currently in Phase 2 with U.S. Food and Drug Administration’s fast track granted.
Therefore, INRLF stock has several stock upside catalysts in the coming quarters. The company is expected to report initial results of the vaccine against Covid-19 in April 2021. A positive outcome should send INRLF stock higher.
Best Stocks: Azure Power Global (AZRE)
Renewable energy stocks have been in limelight with a global push towards cleaner energy sources. There are several attractive names in the solar energy sector, but AZRE stock seems to be one of the hidden gems.
Earlier this year, AZRE stock touched a high of $53.6. However, the stock has corrected sharply to current levels around $26. I believe current levels are attractive for fresh exposure to the stock.
Azure Power is involved in the ownership and maintenance of solar power plants in India. The country has an ambitious long-term target for the shift to renewable energy and Azure Power is well-positioned to benefit.
To put things into perspective, India had 37 gigawatts in renewable energy capacity as of December 2020. By FY2030, renewable capacity is expected to increase to 450GW.
Azure Power already has the second-largest solar power portfolio in India with a current capacity of 7,511 megawatts. Over the next five years, the company expects power capacity addition at a CAGR of 24%. The company is therefore positioned for strong top-line and EBITDA growth.
Aptiv PLC (APTV)
APTV stock is another name to add in the list of relatively lesser-known stocks to buy. In the last 12-months, the stock has surged by 163%. I believe that the stock is positioned for further upside.
Aptiv is a provider of safety and technology solutions for the automotive and commercial vehicle market. The company’s signal and power solution segments are the key revenue and EBITDA driver. However, its advanced safety and user experience segment can be a potential game-changer.
With a vision to deliver end-to-end smart mobility solutions, Aptiv can be a potential beneficiary of electric vehicle and autonomous vehicle growth. As an example, the company has partnered with Hyundai (OTCMKTS:HYMTF) to make driverless vehicles safe, reliable and accessible.
It’s worth noting that the company reported strong bookings of $7.5 billion for Q4 2020. This provides clear revenue and cash flow visibility for the coming quarters.
For Q4 2020, the company also reported a robust operating cash flow of $799 million. This implies an annualized OCF of $3.2 billion. Shareholder value creation will continue through innovation and the company’s ability to deliver robust cash flows.
On the date of publication, Faisal Humayun was long Valneva INRLF stock.
Faisal Humayun is a senior research analyst with 12 years of industry experience in the field of credit research, equity research and financial modeling. Faisal has authored more than 1,500 stock-specific articles with a focus on the technology, energy and commodities sector.