These 3 actions under the radar are great buys right now
If you’re like most investors, the bulk of your stocks are household names. There is nothing fundamentally wrong with it. We’re supposed to have names that we understand and can keep an eye on, after all, so we tend to look to the companies that make the headlines.
There is a lot to be said about the road less traveled, however. Familiar stocks are often heavily traded, which increases the premium you pay for them. Smaller businesses – or at least less visible – are often buried treasures that no one even tries to find.
To that end, three stocks under the radar are worth a closer look as possible additions to your portfolio. In no particular order …
It might be small now, but BigCommerce is growing fast
You’ve probably heard of it Shopify (NYSE: SHOP), the outfit helping merchants escape the heavy online marketplace operated by Amazon by creating their own e-commerce presences. What you may not know is that the demand for these services continues to accelerate rather than slow, even though most of the impact of the pandemic is in the past. Shopify’s revenue for the quarter ending in March is up 110%, driving similar growth in operating profits.
However, Shopify isn’t the only name offering tools for businesses that allow them to build their own online shopping device. BigCommerce Fund (NASDAQ: BIGC) is in exactly the same market, with brands such as Gillette, Skullcandy, Ben & Jerry’s and Ivory as customers. It’s just not as well-known as Shopify, mainly because of its size. BigCommerce is a $ 4.4 billion business compared to Shopify’s market cap of $ 160 billion.
Don’t be fooled by its small size. BigCommerce is riding the same rising tide as Shopify, and it’s winning over some big-name customers. Yeti Cycles and tax software company Mountain peak are two of the latest additions to BigCommerce’s customer list, and in February, the company forged a new partnership with Walmart This will allow BigCommerce customers to list their products on Walmart Marketplace.
Despite these impressive offers, BigCommerce stocks are in a multi-month slump. If it replicates something like Shopify’s biggest growing rival (which it has been so far), that may not be the case for much longer.
Fill your plate with the dividend from SpartanNash
SpartanNash (NASDAQ: SPTN) It might not be a household name, but there’s a good chance that you or someone in your household will be a regular consumer of its products and not know it. The company is a wholesale supplier of groceries, as well as an owner-operator of its own brands.
The past year has been huge – relatively speaking – for the company. With most consumers nationwide effectively trapped at home by the COVID-19 contagion, home-cooked meals have become the norm again. SpartanNash’s revenue improved by almost 10% in 2020, leading to a near doubling of its operating profits. It’s a tough act to follow, however, and analysts don’t expect the company to. According to the latest looks, the analyst community is modeling a nearly 5% drop in sales in 2021, coupled with a 30% drop in profits. Both upper and lower lines are expected to resume growth from 2022, but these growth prospects are modest, as is the company’s past growth.
However, don’t let this slow growth put you off. The bullish case of SpartanNash is rooted in other factors. Namely, this stock’s rebound after the pre-pandemic market lull died down in the middle of last year, barely cutting several years of price deterioration leading up to this low and leaving the dividend yield at 4.4. %.
By the way, this dividend has been faithfully paid quarterly since 2006 and increased annually since 2011.
BlackLine has top customers
Finally, add Black line (NASDAQ: BL) to your list of overlooked actions worth tackling sooner or later.
Don’t sweat if you’ve never heard of it. You’re not alone. It’s just a $ 7 billion organization and it serves businesses rather than consumers. The company offers cloud-based accounting and finance software to midsize businesses.
But what a waste this small business is packing! Last year’s revenue improved 2019 revenue by 22%, and the projected sales growth for this year is 17%. Next year’s revenue growth is expected to accelerate by more than 20%. While not yet profitable on a generally accepted accounting principles (GAAP) basis, operating income nearly tripled to $ 46 million on revenue of $ 351 million. This is $ 0.76 per share, up from operating income per share of $ 0.37 in 2019.
That progress has paid off for most of the past year, but the title has struggled since its peak in February. Investors can watch analysts’ estimates that earnings per share will be halved this year and still fail to recover 2020 earnings levels with expected earnings per share of $ 0.68 for 2022.
These consensus estimates, however, can greatly underestimate the results that BlackLine is able to produce this year and next. This young software company recently erased analysts’ quarterly profit estimates, beating most of the 2019 and 2020 profit outlook with two and three times better than expected results – not to mention steady triple-digit profit growth. since 2016.
And if that’s not impressive, it will be: Coca Cola, eBay, and Kraft Heinz are just a small sample of BlackLine customers.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Questioning an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.