Half the fun of investing in stocks is digging through the markets to find undervalued gems and under-the-radar stocks with long-term potential. At the same time, markets are complex and the depth of information available is overwhelming. “Paralysis by analysis” is a real affliction. It particularly affects newer investors as they learn how to separate the wheat from the chaff in under-the-radar stocks.
As with any long-term investment strategy, three things matter. First, consider the broad economic conditions. Today, in an era of high(ish) interest rates and economic uncertainty, growth stocks and tech stocks are struggling. Depending on your risk appetite, this can present an opportunity to buy great stocks at bargain prices.
Second, underlying fundamentals and financials matter – particularly in a tight economy. If a company can’t withstand brief uncertainty based on its current financials, it doesn’t matter how great its potential is.
To that end, consider the long-term potential. Does the company have a viable product or service that’s in demand and fairly protected from competition?
These three companies have fundamental strength and long-term viability to weather (or even thrive) in today’s economy. Each represents a perfect under-the-radar stock for those hunting for overlooked treasure.
Under-the-Radar Stocks: Howmet Aerospace (HWM)
Howmet Aerospace (NYSE:HWM) is an aerospace company that manufactures and produces various materials and components for aircraft and aerospace end items. Of course, with space stocks set to hit a net value between $1 trillion and $10 trillion in the next few years, Howmet’s long-term viability as a partner to major aerospace companies is clear.
Today, Howmet ensures operational success through diversified products in the trucking industry. As global companies race to tighten up strained supply lines, trucking is a vital link in the chain. Likewise, by producing components for the trucks themselves, Howmet is vital to operational success even as trucking companies pivot to unmanned and autonomous operations.
Howmet is financially successful and posted a profit in each of the past three years, with its most recent quarter marking a record $193 million net income. Its cash balance is also healthy, and the aerospace company has enough money to weather occasional down periods if they arise.
SharkNinja (NYSE:SN) is the definition of an under-the-radar stock, as it snuck onto exchanges via a spinoff in July to limited investor attention. The company might not be at the top of market players’ minds, but it’s a staple in kitchens and homes globally. The company makes and sells a range of appliances, including coffee makers, ice cream machines and hair dryers. Although firmly within consumer discretionary categories, the sluggish economy hasn’t slowed SharkNinja. Instead, the company’s sales have risen 20% each year since 2008. This year, management expects the trends to continue as trends point to $4 billion in revenue by December.
Shares trade at a discount compared to similar, semi-luxury appliance brand competitors. Institutional investors are slowly taking note because of the company’s broad appeal, proven strategy and financial readiness. One portfolio manager from Madison Avenue Partners said that SharkNinja is “a gem that’s about to be discovered,” because “SharkNinja has been able to produce new products in categories that haven’t seen much innovation at attractive prices that delight consumers.”
Ultimately, any company able to sell higher-end discretionary products in today’s economy is noteworthy. SharkNinja’s success points to long-term upside potential for this under-the-radar stock.
Robert Half Inc (RHI)
The global job and labor market is changing, and firms like staffing agency Robert Half Inc (NYSE:RHI) are positioned to ride the new trend to success. Notably, the company is pivoting away from low-margin activities, like temporary staffing solutions, and rotating into long-term contract sourcing.
Notably, contract-to-hire models represent much higher margins for Robert Half. At the same time, they ensure a long-term revenue stream as the client and contractor’s relationship matures. Likewise, these roles open opportunities for Robert Half to partner with more professional, skilled and experienced contractors. Ultimately, the move increases value to the client’s organization and cements RHI’s position in their workflow.
Small business outsourcing is already booming, and digitization means Robert Half can deliver expertise to small business owners globally, no matter how remote the business is or how lacking local talent pools are. This demand makes matchmaking essential, and Robert Half is particularly well-suited to capitalize on emerging trends. This company and the ones listed above are all under-the-radar stocks that you should consider for your portfolio.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.