When strategizing about which equities to acquire, it’s natural to look at the usual suspects. Basically, these ideas attract the bulk of the spotlight. It only make sense that eyeballs track their ebb and flow. However, investors who are willing to take a risk may consider obscure stocks with high potential.
If you want to think of an analogy, it’s akin to dismissing onboard GPS instructions and going with the directions that you were told by folks in the know. While artificial intelligence may guide you based on mileage, the framework could be based on air miles; that is, as the crow flies. The most time-efficient route may incorporate other factors, such as traffic patterns.
Now, the benefit of taking the alternate route is that you potentially get to your destination faster. At the same time, variable dynamics could throw a monkey wrench into the adjusted pathway. It’s high risk, high reward. If you’re okay with that, below are obscure stocks with high potential to consider.
Honest Company (HNST)
To be clear, I wouldn’t necessarily label Honest Company (NASDAQ:HNST) obscure. That would be rather disrespectful to co-founder and former Chief Creative Officer Jessica Alba, the Hollywood actress. Honest falls under the household and personal products industry, specializing in diapers and wipes, along with skin and personal care. Its core ethos is that it matters what consumers put on, in, or around their bodies. Therefore, it holds to high standards of quality and transparency.
Still, HNST might not be the most popular idea out there and that makes it one of the obscure stocks with high potential. It’s unlike many other enterprises in that Honest can leverage Alba’s star power. Yes, she’s stepping down from her officer role. Nevertheless, she’s still very much part of the Honest family. That has intangible value that shouldn’t be ignored.
Further, now might be an ideal time to consider acquiring shares. At the moment, HNST stock trades at 0.78X trailing-year sales. However, in the first quarter of 2024, this statistic averaged 1.11X. And in Q4, it was still elevated at 0.92X. Thus, it’s possible that HNST can grow into its former valuation. That’s probably part of the reason why shares feature a moderate buy assessment with a $4.33 average price target.
Genius Sports (GENI)
Falling under the communication services space, Genius Sports (NYSE:GENI) engages in the development and sale of technology-led products and services to the broader athletic ecosystem: sports, sports betting and sports media industries. Some of its products include tech infrastructure for live data collection and integration along with streaming solutions.
One of its most relevant offerings is the deployment of a proprietary algorithm that identifies and flags suspicious betting activity in global betting markets. As legalization trends gain momentum and as more people speculate in this space, such algorithms could see huge demand. Right now, Genius Sports might not be a household name. It’s relatively small, with a market capitalization of $1.24 billion. However, it addresses burgeoning issues.
From a financial perspective, now may be a time to consider acquiring shares. Presently, GENI stock trades at 2.82X trailing-year sales. However, between Q1 2023 to Q1 2024, this metric averaged 3.16X. Further, the latest quarterly sales growth rate (year-over-year) stands at 23.1%.
For fiscal 2024, experts believe revenue could rise to $499.5 million. That’s up 21%, making GENI one of the obscure stocks with high potential.
PaySign (PAYS)
Based in Henderson, Nevada, PaySign (NASDAQ:PAYS) falls under the infrastructure software space. Per its public profile, PaySign provides prepaid card programs, along with comprehensive affordability offerings, digital banking services and integrated payment processing services. Its main clients are businesses, consumers and government institutions. PaySign also covers a wide variety of industries, including healthcare.
While it might not be the most riveting enterprise, PaySign consistently meets or exceeds expectations. In the past four quarters, the company’s average earnings per share landed at 1.5 cents. That compares to analysts’ expectations, which called for 0.75 cents. In the trailing 12 months, PaySign posted net income of $6.93 million on revenue of $50.32 million.
The solid performance comes at a cost. PAYS stock trades at 4.32X trailing-year sales. However, in the past year, the metric averaged roughly 3.7X. Still, the premium could be worth it.
In fiscal 2024, experts believe that sales may rise 20.2% to hit $56.82 million. In fiscal 2025, the top line could expand again by 12.5%, leading to a print of $63.91 million. Given the projected sustained growth, PAYS ranks among the obscure stocks with high potential.
On the date of publication, Josh Enomoto 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.
