Thanks to the meme-trade phenomenon, many retail investors already have in mind their own great stock buys. Ruefully watching the most popular entities jumping dramatically higher during the first two years of the coronavirus pandemic, 2022 imposed a reality check. But it also meant that those sitting on the sidelines have a time capsule opportunity to correct past indecisions.
I’m not here to suggest that you should avoid this approach. However, with the market taking a relative breather from prior highs, it’s also time to consider misunderstood enterprises. These companies may not be getting a fair shake for a variety of reasons. Maybe they’re boring or deemed controversial.
Whatever the case is, many companies lurking in the shadows actually represent fantastic opportunities Below are seven surprisingly great stock buys.
Robert Half (RHI)
Throughout much of the new normal, staffing service provider Robert Half (NYSE:RHI) faced a contested environment. On one hand, the pandemic initially sparked concerns of an economic catastrophe. To be sure, circumstances have not returned to normal. But on the other end, workers just didn’t want to go back to the usual way of doing things. Thus, a lack of desperation pressured Robert Half’s business.
Naturally, this circumstance clouded the narrative for RHI. However, recent dynamics suggest that the enterprise represents one of the great stock buys. With mass layoffs dominating business headlines, recalcitrant professionals have recognized a harsh reality: if you don’t work, you don’t eat. Put another way, desperation may be coming back and that would bode very well for RHI stock.
To be completely transparent, Wall Street doesn’t see it that way. Presently, analysts peg RHI as a consensus hold. Also, their price target implies downside potential of over 11%. Frankly, it’s misunderstood. Sure, it may have been a sell earlier. Today with the layoffs? RHI ranks among the great stock buys.
H&R Block (HRB)
No one enjoys doing their taxes – even for those with simple returns. It’s just more busy paperwork that nobody needs. Just give us our refund and go away, Uncle Sam! Well, this attitude helps undergird why H&R Block (NYSE:HRB) stands among the misunderstood companies that actually are great stock buys.
Primarily, corporate employees that don’t want to return to the pre-pandemic rat race have two choices: suck it up or join the burgeoning gig economy. As Business Research Insights claims, the global gig economy could reach a market valuation of $873 billion by 2028. That would be a massive surge from where the market stands today. However, the IRS taxes employees and gig workers (or independent contractors) differently.
Without getting bogged down with the details, gig workers feature tax-filing requirements similar to “actual” businesses. For first timers, H&R Block offers an invaluable. It’s just wild that only one analyst actively covers HRB. Whatever – it’s one of the great stock buys as said analyst attests.
While it’s impossible to classify Chevron (NYSE:CVX) as overlooked, it ranks among the misunderstood great stock buys. With both ideological and kinetic catalysts driving international policymakers to renewable energy infrastructures, fossil fuels seemingly stand poised to disappear. Nothing could be further from the truth. Even President Joe Biden admitted as such during his State of the Union address.\
Naturally, big oil firms don’t get much public support, particularly during periods of rising prices. Further, Chevron’s controversy regarding stock buybacks – to the tune of $75 billion worth – don’t help matters. Setting this issue aside, though, the fundamental reality remains the same: we need big oil.
Still, Wall Street does not necessarily share the view that CVX represents one of the great stock buys. Currently, analysts peg CVX as a hold (although their average price target implies 11% upside). Scientifically, when more folks realize that fossil fuels command tremendous energy density, the tune may change decisively northward.
To be clear with my language, I wouldn’t necessarily peg Valvoline (NYSE:VVV) as a misunderstood enterprise. Specializing in its namesake-branded automotive oil, additives, and lubricants, every driver knows what Valvoline is. However, the misunderstanding may come in the framework of an investment opportunity. Most folks might view VVV as a boring trade. In my eyes, it’s one of the great stock buys.
As stated earlier, the labor force presently experiences significant changes. While the labor market remains surprisingly robust, certain sectors – such as tech – suffered (and still suffer) steep losses. Naturally, the pink slip distribution sparks anxieties among remaining workers. They must stay visible or risk the chopping block themselves.
And that would mean higher traffic volumes due to the return of the morning commute. Cynically, this dynamic augurs well for Valvoline, making it one of the great stock buys. In fairness, some analysts recognize the opportunity, with VVV enjoying a consensus moderate buy view. Also, their average price target implies upside potential of over 11%.
NuScale Power (SMR)
Anytime anyone brings up nuclear power, misunderstandings invariably arise. Such is the product and industry evangelism challenge undergirding NuScale Power (NYSE:SMR). Specializing in small modular reactors, NuScale delivers a novel approach to the controversial energy source. In an email, Justin Huhn, Publisher and Founder of Uranium Insider wrote in part the following:
Small modular reactors (SMRs) present an attractive solution for many challenges for providing clean energy solutions. The term SMR refers to the size, capacity, and modular construction only, not to the reactor type and the nuclear process which is applied. Designs range from scaled down versions of existing designs to ‘Gen IV/Advanced’ designs. SMRs are far smaller than conventional nuclear reactors; however, they can be installed in series to generate as much as 500 [megawatt electrical] or more.
In particular, infrastructure engineers can develop SMRs closer to the source of energy demand, bolstering energy security and reliability. Still, nobody currently actively covers SMR. It’s a shame because it’s one of the great stock buys.
Huntington Ingalls (HII)
As a naval shipbuilder, Huntington Ingalls (NYSE:HII) naturally courts controversies because it belongs in the defense sector. In addition, within the defense industry, other more kinetically pronounced enterprises overshadow Huntington. In some ways, it’s a shame because many folks don’t understand that HII represents one of the great stock buys.
Let me be 100% clear (and this is also where misunderstandings occur): nobody should acquire HII hoping for a hot conflict to break out between the U.S. and an adversary. Specific to worsening U.S.-China relations, Huntington benefits from the show of force narrative. In other words, the company builds naval war machines to cause adversaries to think twice about acting out their belligerence.
Put another way, defense firms like Huntington do best managing tensions. If tensions turn into hot wars, it does neither party much good. Still, HII carries a hold consensus among covering analysts: two buys, two holds, two sells. It’s hardly a ringing endorsement for what actually stands as one of the great stock buys.
Service Corporation (SCI)
Service Corporation (NYSE:SCI) ranks among the misunderstood great stock buys for an obvious reason: it’s an icky topic that very few people (if any) like to talk about. Even the corporate name sends jitters down our spine because we know it’s a euphemism. While we often talk about America being a service economy, this is the one service – the final one – that we’d rather refuse if possible.
Of course, it’s not possible unless you happen to be a gifted Nazarene carpenter. For everyone else, it’s inevitable. Still, as macabre as the topic might be, it’s unavoidable. And therefore, it’s also – dare I say it? – lucrative. In particular, with the rapid increase of the population stemming from the post-World War II baby boom, those folks must go somewhere.
Scientifically, within a defined system, the conservation of mass states that matter cannot be created or destroyed. I suppose in this framework, bullishness in SCI represents a clear logical deduction. Still, Wall Street analysts don’t see it that way – they don’t see it at all. That’s too bad. SCI easily ranks among the misunderstood great stock buys.
On the date of publication, Josh Enomoto 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.