The latest market downturn has created several opportunities for investors to pick up high-quality, little-known stocks. That includes blue-chip stocks that have shed value since the beginning of the year. Granted, companies out of the mainstream spotlight tend to be riskier than larger counterparts. Nevertheless, the value of little-known stocks cannot be ignored as the market eventually recovers.
Moreover, a key issue with well known stocks is that major institutional investors are actively buying. Institutional investors also have the liquidity to continue loading up on beaten-down stocks and reap rewards later. Therefore, investing in little-known stocks may be of great benefit, considering they’re probably not on an institutional investor’s radar.
The low profiles of the lesser-known stocks can be a major advantage during current market conditions. Nevertheless, it is important to conduct due diligence before wagering on such stocks. You wouldn’t want to catch a falling knife, which is probably what many investors may be doing now. As you explore your options, keep these little-known stocks in mind.
Premier Financial (PFC)
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Premier Financial (NASDAQ:PFC) is an Ohio-based regional bank that operates close to 12 loan offices and 74 branches across the U.S. Though the business has had to adjust with the rising rate environment, its long-term case remains intact, with its stock poised for robust gains in the future.
For regional banks such as PFC, it is imperative to have higher loan balances on the books. Loans and deposits have grown at a healthy pace in the second quarter, growing to $494.1 million, up 35.7% from the second quarter last year. Moreover, commercial mortgages have rebounded incredibly well, while residential loans are also up 37.8%. Overall, despite the rate shock, loan demand remained remarkable.
With more assets to lend out to consumers, the bank will be able to lend at much higher rates in the second half of the year 2023. Also, investing in PFC stock comes with a handsome dividend yield of over 4.42%, which is hard to let up at this point.
CarParts.com (NASDAQ:PRTS) is an e-commerce platform specializing in aftermarket auto parts and accessories in the U.S. and the Philippines. Its commitment to innovation, financial discipline and customer service has helped it post incredible numbers over the last several quarters. Naturally, its business is under duress due to the current inflationary pressures, but overall, it’s done well to navigate through the headwinds.
PRTS posted record revenues of $176.2 million in the second quarter, up 12% from the prior year. It represented the 10th straight quarter of double-digit revenue expansion, with an adjusted EBITDA of $8.3 million. The firm’s management remains committed to refining operations and employing a more customer-oriented approach to business.
Hence, the company’s long-term outlook remains favorable. Its ability to grow during these difficult times is heartening and a testament to its tremendous long-term positioning. Furthermore, its stock trades at just 0.47 times trailing 12 month sales, more than 25% lower than its 5-year average.
PubMatic (NASDAQ:PUBM) is a successful sell-side advertising business that’s flying under radar, despite its strong performance. Over the years, it has built an impeccable financial profile, delivering robust returns for investors. In its second quarter, it boosted sales by a tremendous 27% from the prior-year period to $63 million, well ahead of analyst estimates of $60.7 million.
Moreover, the numbers came in well ahead of the management’s guidance of $60 million to $62 million, a great start given the challenging macroeconomic conditions. Though it was forced to lower its full-year outlook, it still expects to beat analyst estimates by a fair margin.
With publishers increasing revenue from PubMatic and attracting more spending from buyers, it allows the platform to improve using the droves of data coming in. The platform’s efficiency and access to audiences and inventory from leading publishers reinforce its long-term case.
On the date of publication, Muslim 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.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.
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