Hidden gem stocks are a great way to invest in a market spooked by persistently nagging inflation and a cautious Federal Reserve unwilling to pull the trigger on rate cuts this year; the Dow Jones Industrial Average fell 570 points on May 29, making it the worst month of 2024 for it.
The Fed’s last meeting minutes suggested they were ready to tighten monetary policy to control inflation, which has raised the 10-year Treasury note’s yield to roughly 5%, making people less interested in buying stocks.
However, amidst this, Bank of America analysts predict the S&P 500 will hit $5,000 as the market adjusts to greater inflation and interest rates. Meanwhile, Goldman Sachs now forecasts 5,100 for the S&P 500 and Deutsche Bank is predicting similar numbers, believing the U.S. economy is approaching a soft landing, which bodes well for stock prices.
Broadly, the sentiment is mixed, which is why hidden gem stocks are the best option; they are down this year despite buy ratings, and the first of these handles unpredictable markets by carefully transferring factories and adjusting automobile production. The second pick is a crypto mining giant expanding amid takeover attempts. Last is a big education tech name in changing the way people around the world learn languages, targeting a $61 billion market.
Rivian Automotive (RIVN)
Rivian Automotive (NASDAQ:RIVN) is one of the most undervalued hidden gem stocks among electric car stocks, losing 51% this year, trading at close to its all-time low of $8.84.
RIVN made and shipped 13,980 cars in the first quarter of 2024 and is tracking to make 57,000 cars this year. During the first quarter, the R1S type was the most popular electric car in the U.S. in the above $70,000 category.
Plus, RIVN is building a $5 billion EV facility in Georgia despite the setbacks, It is, however, delaying construction for now. After a small change, RIVN will manufacture the R2 in Normal, Illinois, instead of Georgia, saving over $2 billion as it looks to become profitable by the year-end. Rivian plans to start R2 production in early 2026 at the Illinois factory, which received $827 million from the state to expand.
Regarding its existing product line, Rivian is planning changes to its R1T and R1S model modifications for 2025, including the use of lithium iron phosphate (LFP) batteries, which have less energy density than existing batteries but are cheaper and last longer.
Bitfarms (BITF)
Bitfarms (NASDAQ:BITF), down 23% this year, just rejected Riot Platforms‘ (NASDAQ:RIOT) offer to buy all of Bitfarms’ outstanding stock for $2.30 each, or $950 million; Bitfarms’ stock saw a rise following the deal’s breakdown.
The offer was 24% higher than Bitfarms’ volume-weighted average share price over the past month, but the miner said the offer “significantly undervalues” the business.
The issue is still ongoing; RIOT remains the biggest investor in BITF, with a 9.25% stake, and is looking to force a special shareholders meeting and replace some board members with independent directors so the offer can go through. On the other hand, Bitfarms, with the help of investment bank Moelis, is considering the other offers on the table.
Amid these takeover bids, BITF added 24,000 miners recently to reach 88,000 in 2024, critical after the fourth Bitcoin halving. It aims to attain 21 EH/s in 2024 from 7.0 EH/s. By adding energy to its Paraguayan Yguazu farm, Bitfarms raised its power output to 200 MW. In 2025, this extension will add 23% megawatts to manage the whole amount.
Duolingo (DUOL)
Duolingo (NASDAQ:DUOL) wraps up our discussion on hidden gem stocks with a consensus price target of $255, which translates into roughly 30% potential upside; unsurprising, considering Duolingo is targeting 1.8 billion people around the world who want to learn another language, leading to a potential $61 billion market to tap.
Apart from the potential of the language learning market, Duolingo is also valuable among hidden gem stocks because it’s continuously updating its platform to incorporate new elements, adding math and music lessons in a recent upgrade.
Duolingo also revamped its model to include subscriptions, one of which is a “Max” plan with extra features meant to keep users interested and coming back; paid subscriptions are up 54% to 7.4 million at the end of Q1’24.
Meanwhile, month-to-month active users climbed 35% to 97.6 million, and daily active users rose 54% to 31.4 million; Duolingo’s net profitability of $27 million surpassed Wall Street projections by 46%.
Duolingo also upped its full-year forecast to $808.5 million to $817.5 million in bookings and $726.5 million to $735.5 million in revenues for 2024.
Much of the revenue will come from China, as the number of Chinese customers who use Duolingo to learn English has grown by more than 100% over a short period, leading to Duolingo investing more in the country.
On the date of publication, Faizan Farooque 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.
