Popular high-flyers like the Magnificent Seven tend to cause tunnel vision in investors. Investors then focus solely on trending stocks and miss other value opportunities in the market. Even if some undervalued stocks have not yet taken flight, a closer look at their performance and underlying drivers can help spot some diamonds in the rough. Sure, they might not be glittering just yet. However, keeping tabs and learning about their competitive advantages can yield a home run.
However, we know that spotting an excellent bargain can be challenging. You would have to spend time and effort comparing companies left and right. One effective way is to look at sector leaders who are lagging despite having stellar financial performance and market resiliency. If you are still unsure where to look, these three undervalued stocks are a good start.
Immersion Corporation (IMMR)
If you are a gaming fan, you might not be aware that Immersion Corporation (NASDAQ:IMMR) plays a big role in the industry. The company develops and licenses haptic technology. This has many uses including gaming, virtual and augmented reality, entertainment, wearables, and more. Its partnership with Sony for the PS5’s haptic feedback and Nintendo’s Rumble are just some of the company’s known successes.
IMMR’s latest financials show promise. Total revenues grew by 13% to $10.4 million in Q4, driven by increased royalty and license revenues. GAAP net income declined to $16 million in Q4 from $19.7 million last year. However, the company’s full-year net income rose to $34.0 million compared to $30.7 million last year.
Interestingly, IMMR has demonstrated a commitment to rewarding shareholders through dividends and enhancing investment returns. I say it’s interesting, because it’s not every day you run into a microcap thinking about shareholder value. Maybe that’s why Immersion Corp has several analysts’ stamp of approval.
If they play their cards right and continue to be a leader in haptics while maintaining strong relationships with big players like Sony and Nintendo, IMMR could be one of the most undervalued stocks in the market.
Gulfport Energy Corporation (GPOR)
The Wall Street favorite Gulfport Energy Corporation (NYSE:GPOR) is a natural gas-weighted production and exploration company. They mainly operate in the Appalachia and Anadarko basins. The company aims to sustainably, safely, and responsibly develop its assets. They also continuously generating cash flow, returning capital to shareholders, and improving margins. The company has been at the forefront of promoting a high standard of natural gas production. One of its operations garnered a grade “A” certification under the MiQ emission standard.
GPOR reported a total net production average of 1,054.3 MMcfe (million cubic feet of gas equivalent) per day in 2023. This value came in at the high end of the company’s guidance, despite raising them previously.
For its full year, revenue was $1.79 billion, while net income reached $1.47 billion, representing an impressive 34.60% and 197.33% YoY growth, respectively.
While the company experienced challenges in natural gas pricing, it still exceeded analyst consensus expectations in net income, EBITDA, and total net production. The company’s 2024 outlook aims for focused capital-efficient programs to ensure future growth. Despite challenging times for the natural gas market, its performance proves its resiliency and the strength of its leaders, making it an undervalued gem right now.
CompoSecure, Inc. (CMPO)
Do you have a metal credit card in your wallet? CompoSecure, Inc. (NASDAQ:CMPO) financial technology solutions for payment cards, digital asset storage, and cryptocurrency solutions. The company is considered the leader in premium metal payment cards, with its Arculus security and authentication that offers its clients a premium branded experience through partner-branded solutions.
CMPO is a recognized player in the industry. ABI Research ranks it #1 in the metal card market, recognizing its comprehensive portfolio of products, extensive global reach, and drive to innovate. This shining review is reflected in CMP’s recent financials. Quarterly net sales rose 7% YoY to $99.9 million, net income rose 39% YoY to $31 million, and adjusted EBITDA increased 22% YoY to $37.2 million.
Full-year results were a little softer; net sales rose 3% YoY and reached $390.6 million, while adjusted EBITDA grew 6% YoY to $145 million.
However, the company expects 2024 to be a year of growth, with net sales anticipated to fall between $408-$428 million and adjusted EBITDA between $147-$157 million. Its long-term agreements with major clients like JP Morgan Chase and American Express ensure its long-term potential for growth as a significant leader in the metal payment card market. With analysts recommending it as a strong buy, CMPO has more than earned its place in the top undervalued stocks to look out for right now.
On the date of publication, Rick Orford 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.
