A lot of success in the market goes unseen. Certain stocks tend to get written about ad nauseum while others get no attention at all. A stock like electric vehicle maker Tesla (NASDAQ:TSLA) is down 43% on the year, and journalists and analysts on TV discuss it around the clock. At the same time, not a single analyst covers undervalued stocks like tow truck operator Miller Industries (NYSE:MLR) despite its share price being up nearly 50% in the past year.
Stocks that are attached to celebrity CEOs and popular consumer products that hedge funds widely hold tend to dominate the business press. However, these stocks account for a small percentage of the overall market. In reality, many great stocks have quietly but steadily outperformed, driven higher by competent management, strong earnings and a competitive edge. Let’s uncover three hidden gems that are undervalued stocks poised for exponential growth.
IES Holdings (IESC)
In a recent blog post, investor Eddy Elfenbein highlighted little-known stock, IES Holdings (NASDAQ:IESC). It has run circles around the broader market over the past decade. During the last five years, IESC stock has risen an astounding 574%. In the past 12 months, the share price has almost tripled and it is up more than 50% so far in 2024. The company provides electrical systems to residential houses, industrial facilities and some technology data centers. Not sexy or exciting, but it’s profitable.
In business since 1997, IES Holdings has 8,000 employees and $2.4 billion in annual revenues. Part of the reason IES Holdings is a silent stock is that no analysts cover the company. Zippo. Yet IESC stock is an incredible story. Consider that 12 years ago, the share price was at $1.75. Today, it is trading close to $120. In its last fiscal year, IES Holdings earned $4.71 per share. Sadly, the Houston, Texas-based company remains unheralded and little known.
Textron (TXT)
In the investing world, it’s fair to say Textron (NYSE:TXT) doesn’t get a lot of attention. Based in Rhode Island, Textron began in 1923 as a textile company that mostly produced yarn. Today, Textron is an industrial conglomerate that produces products ranging from snowmobiles and all-terrain vehicles (ATVs) to small Cessna airplanes, as well as aircraft engines. The business unit that today makes aircraft engines has morphed from its original role of making household sewing machines.
While it gets little notice, TXT stock has performed strongly, increasing nearly 40% in the last 12 months, including a 17% year-to-date gain. Since the pandemic in spring 2020, Textron’s stock has risen 260%. Strong earnings have helped to propel TXT stock higher. For 2024, Textron has forecast earnings growth of 58.6%. That is more than four times the industry average earnings growth of 12.3%. The company is well run and its transformation from textiles to industrials has clearly paid off.
Copart (CPRT)
Considering its growth trajectory, Copart (NASDAQ:CPRT) deserves more love. In the past decade, the company that specializes in running online auctions for salvaged vehicles has seen its share price rise more than 1,000%. This includes a 220% increase since 2019. In fact, CPRT stock is one of the best performing securities of the last 20 years, outperforming e-commerce giant Amazon (NASDAQ:AMZN). Unfortunately, junk cars don’t generate a lot of attention in the business press.
Much of Copart’s success stems from the company’s very little competition. Some analysts claim Copart operates in a duopoly alongside IAA, a similar company that Ritchie Bros. Auctioneers (NYSE:RBA) acquired in 2023 by . But Copart is the much bigger player and market leader, giving it a wide competitive moat. This has led to consistently strong earnings from Copart, with its earnings per share (EPS) nearly tripling in the last five years and hitting a record $1.26 in fiscal 2023.
On the date of publication, Joel Baglole held a long position in CPRT. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
