Wall Street actually largely ignores and tremendously underestimates great stocks fairly frequently. And the phenomenon has become even more widespread than usual over the past few years. That’s because most large investors believe that the vast majority of small and medium companies are in great danger of failing due to today’s relatively high interest rates.
But today’s interest rates are actually not that high from a historical perspective. And it’s clear that great small-and-medium companies can indeed thrive despite the elevated rates.
Among the companies in the latter category whose stocks have risen tremendously (after being largely ignored and greatly underestimated by the Street) are Celsius Holdings (NASDAQ:CELH), Super Micro (NASDAQ:SMCI), and Dutch Bros (NYSE:BROS). Here are three largely undiscovered stocks that are poised to follow the same path over the longer term.
American Superconductor (AMSC)
American Superconductor’s (NASDAQ:AMSC) products are used to regulate electrical currents and manage wind turbines. Additionally, the company develops products used by the U.S. Navy to evade and detect mines.
In-line with my previous predictions, the company reported very strong fiscal fourth-quarter results on May 29. Specifically, its top line jumped to $42 million last quarter versus $31.74 million during the same period a year earlier. Further, its operating activities generated $2.14 million of cash, versus cash burn from operating activities of $22.5 million in Q4 of 2023.
In my previous assessment of AMSC stock, I predicted that the company would likely benefit from the success of its partner, Indian wind energy developer Inox Wind. That appears to have been the case, as the revenue generated by American Superconductor’s wind unit more than doubled year-over-year to $7.8 million last quarter.
Going forward, I expect American Superconductor to continue to be boosted by Inox’s strong growth. Moreover, the U.S. firm also obtains a significant amount of its revenue from chipmakers, so it should benefit from the rapid growth of chip manufacturing in America.
Finally, the firm obtains a meaningful amount of its revenue from utilities. With utilities building many new power plants to satisfy the increasing demand for electricity, American Superconductor is well-positioned to get a meaningful lift from the latter phenomenon.
Symbotic (SYM)
As I noted in a previous column, “Symbotic (NASDAQ:SYM) provides industrial robots that are autonomous and powered by its proprietary AI software.” The company’s robots are primarily currently used in warehouses, and it has signed up multiple, huge customers, including Walmart (NYSE:WMT), FedEx (NYSE:FDX) and Target (NYSE:TGT) .
Given the ongoing labor shortages in the U.S. and the continued enhancements in robots’ capabilities enabled by AI, I predict that Symbotic will grow tremendously going forward.
Indeed, the firm is already delivering strong growth as its sales surged 59% last quarter versus the same period a year earlier to $424 million. And for the current quarter, the firm expects to generate EBITDA, excluding certain items, of $27 to $29 million. The latter outlook indicates that the company is moving rapidly towards overall profitability.
Given these points, I view Symbotic as one of the best largely undiscovered stocks to buy at this point.
GE Vernova (GEV)
GE Vernova (NYSE:GEV) sells parts used in power plants and electrical grids. The company also markets wind turbines.
As I’ve stated previously, ‘the firm is very well-positioned to get a big lift from the rapidly rising demand of electricity going forward.
The Street is starting to catch onto this story, but it is still greatly underestimating GEV stock. As evidence of that point, consider that Morgan Stanley recently initiated coverage of the name with a lukewarm “equal weight” rating, even though it concedes that the firm will benefit from “growing electricity demand, power grid reliability and the need to slash carbon emissions” going forward.
On the date of publication, Larry Ramer held long positions in AMSC,GEV,CELH, and SMCI. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
