Silent stocks will do a lot of the heavy lifting for portfolios in the background. Of course, these companies aren’t the ones making headlines every day like NVIDIA (NASDAQ:NVDA) or Tesla (NASDAQ:TSLA). However, silent companies are the ones that quietly compound over the years. These will help grow your portfolio in the long term. In other words, these stocks can help amass fortunes for investors without having to ever lift a finger.
So what constitutes a silent stock? Often these stocks do not get the same coverage as other more high-profile companies. They can be in industries that are not as sexy as things like AI or electric vehicles. Or they can be lesser-known companies that aren’t always considered the leaders in their particular sectors. In this article, we chose three silent stocks that have provided excellent returns to shareholders so far this year. These three can quietly amass fortunes for investors over the next decade or more!
Arm Holdings plc (ARM)
Arm Holdings plc (NASDAQ:ARM) is a semiconductor company that provides chips and CPUs for AI. While this company may be in a trending industry, it has largely been left in the shadow of its older siblings. These include NVIDIA and Broadcom (NASDAQ:AVGO). ARM is a relatively new stock to the markets. Its one-year analyst price range starts at $55.95. It goes as high as $189.00, which implies a 20% upside from today’s price.
What makes Arm a special chip company? It is the leading provider of IP solutions for a wide range of different types of chips. These include CPUs, GPUs and NPUs. Arm’s chips and its technology are more energy-efficient and low-cost than its peers. They are also used by companies worldwide to develop advanced technologies. Arm-designed chips are used to power most smartphones including Apple’s iPhones. As a testament to this companies fast growth, ARM is set to join the NASDAQ-100 index by mid June!
While Arm’s stock trades at a somewhat high premium, when compared to its industry forward earnings median, Arm trades at a lower multiple than peers like Micron (NASDAQ:MU) and Intel (NASDAQ:INTC). For now, let these other companies keep the headlines, and allow Arm to silently amass a fortune for you in the shadows of the other chip giants.
Freeport-McMoran (FCX)
Looking for another way to play the AI race without buying expensive chip stocks? Look no further than Freeport-McMoran (NYSE:FCX),one of the largest copper miners in the world, and a leading supplier of raw materials for such AI chip manufacturing. Currently, FCX has an average price target of $50.84 and a high-end target of $55.96, implying a near 15% upside for the stock.
While commodity-based companies may seem boring, copper will be one of the raw materials in high demand in the coming years. We’ve already seen the metal hit fresh all-time highs last month on the excitement of rapidly accelerating data center demand. After all, copper is a vital component of semiconductors and wiring that is used to connect data centers worldwide. Just this past year, this silent stock has already returned more than 14% to shareholders this year while paying a modest dividend yield of 0.62%.
Even after gaining 14% this year, this stock is still sitting modestly below its sector median EV/EBIT ratio by around 12%. Any investor looking to jump on AI’s demand fueled trend in a more diversified way should look at FCX as a candidate amassing long-term fortune.
Elf Beauty (ELF)
Elf Beauty (NYSE:ELF) is another stock that has been silently outperforming the markets this year. Wall Street analysts have an average price target of $208.08 and a high-end price target of $235.00 for ELF which implies a 25% upside from the stock’s current price.
This beauty and cosmetics company just posted 77% year-over-year growth in net sales for the fiscal year 2024. It was the fifth consecutive year of sales growth for the company and has slowly but surely taken market share from larger brands. A key competitive moat for this company has been its success in promoting its product across social media platforms like Instagram, Pinterest and Tik Tok, which has allowed it to strengthen brand loyalty amongst younger shoppers.
After its rally this year, this stock’s earnings and sales ratio are a bit pricier than its five-year average. Thankfully, when looking at its PEG to account for growth, ELF is only barely sitting above its sector median. While this is currently justified by its stellar growth as of recent, this company can be a sure bet in the cosmetic industry as a silent compounder to add to any diversified portfolio.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (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.
