Best Under-the-Radar Stocks to Invest in 2024

Under-the-radar stocks that are issued by lesser-known companies can be great wealth builders for investors. Just being little-known, however, doesn’t make a stock a good under-the-radar pick. The best overlooked stocks are those that have shown consistent revenue and earnings-per-share (EPS) growth and trade at attractive valuations.

Most, but not all, of the stocks in this guide are small-cap stocks that aren’t household names, but they all have business models that point to continued success. Some of them have simply been overshadowed by popular companies in the same sector, even though they are showing better financial performance than their better-known competitors. Read on to discover 10 of the best under-the-radar stocks:

Best Under-the-Radar Stocks to Buy in 2024

Here’s a quick overview of the 10 best under-the-radar stocks:

  1. GigaCloud Technology: The small e-commerce tech company is a pioneer of storage and delivery services for large-parcel merchandise. It connects suppliers with online merchants.
  2. Comfort Systems USA: The large-cap installation and service provider for mechanical, electrical, and plumbing building systems is seeing revenue gains from new construction projects.
  3. Radcom: The Israel-based tech company sells monitoring and service assurance software to telecommunications carriers. It’s a key player in helping telecom operators transition to 5G networks.
  4. Napco Security Technologies: The small-cap U.S. security firm sells electronic locking devices, building access control systems and other security systems. It’s coming off a record quarter. 
  5. JD.com: The Chinese e-commerce giant isn’t that well-known outside its home country, but it’s showing strong growth. It has also branched out into healthcare, insurance and property development. 
  6. NewLake Capital Partners: It’s the No. 2 real estate investment trust (REIT) for the cannabis industry, but it has performed better than larger rival Innovative Industrial Properties (NYSE: IIPR). 
  7. Greenbrier Companies: It supplies equipment for freight transportation and services, such as railcar maintenance, parts and retrofiting. It sells freight railcars in the U.S., Europe and Brazil.
  8. Photronics: The U.S. firm is a leading maker of photomasks, the high-precision quartz plates that contain microscopic images of electronic circuits. It benefits from AI demand 5G rollout.
  9. Cogent Communications: The small-cap offers internet access and data transport through its fiber optic, IP data-only network, ethernet transport, and colocation services. Revenue jumped in 2023.
  10. MGM Resorts International: The operator of well-known Las Vegas casinos, such as the MGM Grand, Bellagio, and Mandalay Bay, had double-digit revenue growth in the last fiscal year. 

A Closer Look at the Top Under-the-Radar Stocks to Invest in

Let’s take a detailed look at the investment rationale behind each of the under-the-radar stocks we think are worth watching in 2024:

1. GigaCloud Technology –  Pioneer Becoming a Supply Chain Star

The e-commerce tech pioneer’s GigaCloud’s service revenue from its GigaCloud 3P, its product revenue from GigaCloud 1P and off-platform e-commerce should be lifted by the transition from 4G to 5G. The company has grown its logistics and warehousing infrastructure, allowing it to provide smoother transactions for suppliers and resellers.

gct chart

In 2023, the small-cap stock had revenue of $703.8 million, up 43.6%, and net income of $94.1 million, up 292.1% from 2022. Its GigaCloud 3P service revenue rose 92% year over year in the fourth quarter, to $69.3 million. Thanks to an increase in the number of the company’s sales channels, its product revenue from off-platform e-commerce was $87 million in the fourth quarter, up 179.7% over the same period last year.

Even though its shares have climbed more than 53% this year, it’s trading below 16 times earnings. Considering its growth potential, it still appears to be a bargain.

Ticker  P/E  Dividend Yield
NASDAQ: GCT 15.29 N/A

2. Comfort Systems – Construction Boom Fuels Its Cash Flow Growth

Comfort Systems USA is better known by its industrial clients than the general public. It benefits from the trend of businesses moving production back home, known as reshoring, the expansion of data centers, electric-vehicle battery production, and chipmaking. It has been quite active in acquisitions and has boosted annual revenue by 93% and annual EPS by 192% over the past five years.

Fix chartIn 2023, it had revenue of $5.21 billion, up 25.8%, and EPS of $9.01, up 32.1%, led by growth in projects related to new construction. Comfort more than doubled its cash flow from operations to $639.6 million. Its backlog was $516 billion compared to $4.06 billion at the end of 2022. As of Dec. 31, 2023, it only had $42.3 million in debt and has had a positive cash flow for 25 consecutive years.

Comfort raised its quarterly dividend by 2.5% last year to $0.25, raising it for the 11th consecutive year. It’s well covered with a payout ratio of only 9.8%. 

Ticker  P/E  Dividend Yield
NYSE: FIX 35.12 0.32

3. Radcom – 5G Rollout Helped It Post Record Revenue, Turn Profitable

Radcom is using AI to develop cloud-native network intelligence offerings for telecom companies, including Rakuten, DISH, AT&T and Vodafone, that are rolling out 5G networks. The small cap has improved quarterly revenue for 16 consecutive quarters, and 2023 marked the first year it turned a profit. Its long-term contracts provide a solid backlog that should continue to drive revenue.

rdcm chartThe company is undergoing a management transition as CEO Eyal Harari recently retired and was replaced by Guy Shemesh, who co-founded and later led Nokia’s CloudBand Business Unit.

In 2023, Radcom had a record $51.6 million in revenue, up 11.9% and EPS of $0.24, up 50%. This year, the company is forecasting full-year revenue of between $56 million and $60 million, up 12.4% at the midpoint. Though it’s a small company and that presents some risks to investors, it has $82.2 million in cash and no debt.

Ticker  P/E  Dividend Yield
NASDAQ: RDCM 45.77 N/A

4. Napco Security Technologies – Bound for Growth Via Recurring Income

Napco sells high-tech electronic security equipment, mostly to businesses and schools. It’s an area that is booming, with the commercial security market expected to expand at a compound annual growth rate (CAGR) of 7.8% through 2028, according to a study by research firm MarketsandMarkets

nssc chartThe exciting thing about Napco’s record fiscal second quarter is that it was led by a growth in recurring service revenue, which has higher margins than sales of its security equipment. Another area that grew was the company’s Alarm Lock and Marks locking product lines. The company has increased sales for 13 consecutive quarters.

In the fiscal second quarter, it had revenue of $47.5 million, up 12.3% year over year, with recurring service revenue rising 25% over the same period last year to $18.5 million. Napco had $0.34 in EPS in the quarter, a jump of 209% year over year. The company, as of the end of 2023, had no debt.

Napco, buoyed by its strong finances, just raised its quarterly dividend by 25% to $0.10. If you invested $10,000 in Napco stock 10 years ago and reinvested its dividends, today you would have more than $119,030, a return of 1,090%.

Ticker  P/E  Dividend Yield
NASDAQ: NSSC 34.05 1.01%

5. JD.com – Big Chinese E-commerce Player Still Overlooked

The Chinese company, commonly known as Jingdong, specializes in e-commerce directly to consumers. It directly controls its inventory and logistics, which leads to higher margins, and it’s using innovative technologies like drones and autonomous vehicles for its logistics. It’s one of the few large-cap companies on this list. It trades at less than 13 times earnings, though, indicating that it may be undervalued. JD has posted strong results this year, even while the Chinese economy is mired in a slump. 

jd chartIn fiscal 2023, JD.com had revenue of 108 trillion yuan ($152.8 billion), up 3.7% and net income of 24.2 billion yuan ($3.4 billion), up 133%. The drivers of the good performance were higher sales in the home appliance and electronics categories, the company said.

At its low P/E ratio, the stock appears to be a bargain, especially considering the expected growth of the middle class in China. The company has said it plans to buy back $3 billion of its stock over the next three years and it raised its quarterly dividend by 22.5% this year to $0.76. 

Ticker  P/E  Dividend Yield
NASDAQ: JD 12.77 2.73%

6. NewLake Capital Partners – Outperforming Its Main Cannabis Rival 

NewLake provides capital to cannabis growers by buying their properties and then renting them back to them with long-term triple-net leases that put most expenses on the renters. The continuing growth of cannabis sales in the U.S., as more states open to medicinal or adult-use marijuana sales, or both, helps NewLake, regardless of which grower businesses prosper.

nlcp chartIn 2023, NewLake had $47.3 million in revenue, up 5.1% from 2022. Adjusted funds from operations (AFFO), a more accurate measure of profitability for a REIT than net income, rose 5.2% to $40.7 million in 2023. The company has an above-average quarterly dividend that it just raised by 2.5% to $0.41 and its AFFO payout ratio is around 78%, relatively conservative for a REIT.

NewLake has outperformed its larger cannabis REIT rival Innovative Industrial Properties. Despite recent gains in its share price, it still trades at less than 10 times its price-to-AFFO ratio, indicating that it might be attractively priced.

NewLake just got good news from the Florida Supreme Court, which ruled that Amendment 3 can be put on the state’s ballot next fall to allow adult-use sales. The state already allows medical-use sales and had $2.5 billion in 2023 sales. NewLake estimates that if approved, adult-use sales would grow to more than $6 billion in annual sales in Florida where it has several tenants, including Trulieve, Curaleaf, Cresco, AYR and the Cannabist.

Ticker  P/E  Dividend Yield
NASDAQ: NLCP 17.82 8.55%

7. Greenbrier Companies – On Track for Another Strong Year

Greenbrier, a small-cap stock valued at only $1.64 billion, has a fleet of more than 14,000 railcars that it leases out with its fleet having a remaining average lease term of 4.1 years. That comes in addition to its core business of making railcars and providing maintenance services for them. The company helped pioneer the use of double-stack railcars.

gbx chartGreenbrier has bounced back from two down years, 2020 and 2021, during the pandemic. In the first quarter of 2024, it had revenue of $808 million, up 5.5% year over year and EPS of $0.96, up 182% over the first quarter of 2023. 

In terms of its valuation, it appears to be a bargain, considering its steady cash flow, and that it’s trading below 17 times earnings. Greenbrier raised its dividend by 11% last year to $0.30, and over the past decade, its dividend has doubled.

Ticker  P/E  Dividend Yield
NYSE: GBX 16.20 2.28%

8. Photronics – Unique Product, Strong Beneficiary of AI, 5G Growth

Photronics makes photomasks, used to make integrated circuits (IC) and flat panel displays. It has plants in the U.S., Taiwan, Korea and Europe. Photronics is a small-cap stock, but it has big growth potential due to rising need for advanced chips.

plab chartIn the first quarter of fiscal 2024, the company had revenue of $216.3 million, up 2% year over year, and EPS of $0.42, up 83% over the same period a year earlier. It improved its cash position by 52% year over year to $508.5 million. Its high-end products were the reason for the improved sales, with Photronics seeing strong demand from Asian foundries.

In the fiscal second quarter, Photronics is expecting revenue to rise to between $226 million and $236 million, a jump of 6.7% from the previous quarter at the midpoint, and a slight increase from the same year-earlier quarter at the midpoint. Over the past three years, the company has increased its operating margin by 160% and quarterly EPS by 237%. Despite that growth, it trades for less than 13 times earnings.

Ticker  P/E  Dividend Yield
NASDAQ: PLAB 12.70 N/A

9. Cogent Communications – Betting on Big Expansion with Sprint Assets

Cogent manages one of the largest fiber optic networks in the U.S. and it focuses on low-cost, high-speed Internet access, private network services, and data center colocation space and power. The company made a controversial move when it purchased Sprint’s legacy wireline assets from T-Mobile for $1 and updated them. Cogent’s shares tumbled on the news because that side of T-Mobile’s business was unprofitable. However, last year, Cogent reported it gained $1.4 billion last year from the move.

ccoiIn 2023, Cogent said it had $940.9 million in revenue, up 54.2% from 2022, and net income of $1.27 billion, up from $5.15 million in 2022. EPS rose to $26.62 from only $0.11 in 2022. The biggest concern about Cogent is how soon it can pay down its debt as at the end of 2023 it had $1.3 billion in net debt, up from $978 million at the end of 2022.

It has one of the best dividends that most investors don’t know about, delivering an above 6% dividend yield. Cogent has increased its dividend for 46 consecutive quarters. On top of that, the stock trades for less than only three times earnings.

Ticker  P/E  Dividend Yield
NASDAQ: CCOI 2.36 6.14%

10. MGM Resorts International – A Solid Bet With Good Financials

Las Vegas casino operator MGM Resorts International, which also runs casinos and resorts across the U.S. and in China and Japan, is quite well known, but it’s being overlooked, in my opinion. It’s expected to benefit as China continues to rebound from the COVID-19 pandemic and its current economic doldrums. Gamblers from mainland China continue to travel to MGM’s casinos in Macau. The growth of online sports gambling in the U.S. also helps MGM as its sports betting and iGaming brand is in 28 North American cities and on Carnival Cruises.

mgm chartA cyberattack on the company’s network in September sent the stock’s price downward, but MGM just finished a strong financial year. The company posted record revenue of $16.2 billion in 2023, up 23% from the previous year, thanks mainly to improved revenue at MGM China and better non-gaming revenue at its Las Vegas resorts. Full-year EPS fell 8.5% to $3.19, but in the fourth quarter, its earnings appeared to be bouncing back a bit with EPS of $0.92, up from $0.69 in the same period a year earlier.

MGM Resorts is trading at under 15 times earnings and considering the potential growth drivers it has, that looks like a bargain.

Ticker  P/E  Dividend Yield
NYSE: MGM 14.66 N/A

How to Pick the Best Under-the-Radar Stocks

Finding solid under-the-radar stocks takes more research than run-of-the-mill stock investing. Many of the best under-the-radar stocks have little written about them, they aren’t covered by analysts and don’t have as long a track record as the typical S&P 500 company.

Overlooked stocks, though, can be great options for investors looking for strong growth potential. These lesser-known stocks are often smaller companies can also come with risk, particularly that of higher volatility. There are ways, though, to mitigate these risks.  

Look for Advantages

Search for lesser-known stocks that are in growth industries that have an obvious route to expanding their market share, either because they have a moat, a unique product or are benefitting from a new technology.

JD.com, for example, benefits because it’s well suited to capture the expected expansion of the e-commerce market, driven by a growing middle class in Asia, and in particular, in China.

Greenbrier Companies, on the other hand, has a unique niche market that isn’t easy to break into. Photronics has a unique product with a growing technology that is in demand. NewLake Capital Partners benefits from the expansion of cannabis sales, driven by a wave of legalization in more and more U.S. states, and the need of marijuana growing companies for capital.

Check Under the Hood

Companies that are small or overlooked may have fewer cash reserves, making them a bigger risk than larger companies. However, if you can find well-performing, lesser-known stocks with consistent revenue growth and EPS growth, you can get in on a stock before it soars, and that’s a good way to build wealth. All of the stocks on this list have grown revenue by 24% or more over the past three years.

underradar chartWhile a low price-to-earnings ratio is one sign of an overlooked stock, relying solely on that metric is dangerous. Sometimes, a stock trades for a low valuation because its business fundamentals have changed for the worse, but only recently. The best under-the-radar stocks may have relatively low valuations compared to their peers, but more importantly, are coming off solid years and have forecasted decent growth for the current year as well. It’s also important when looking for overlooked stocks to find those that are not weighed down by a lot of debt. 

Sometimes under-the-radar stocks have an advantage over larger stocks because they can more quickly adapt to market trends. Two examples of this in the above list are Gigacloud Technology and Radcom, both of which are benefiting from the current push to 5G networks.

Know the Risks

There’s less information, obviously, on under-the-radar stocks, so it behooves investors to dig a little deeper into company reports and industry trade publications before taking a plunge and buying stock in these companies.

Under-the-radar shares can be risky investments, particularly in the short term, because they are more volatile due to their generally smaller market caps. Their relatively smaller size makes it more difficult to quickly exit a position in under-the-radar stocks.

Where to Get Under-the-Radar Stock Picks and Insights

To gain an edge in finding the best under-the-radar stocks, we recommend checking out AltIndex

AltIndex provides stock picks, alerts, and insights using alternative data. This means that it analyzes social media and other websites, app downloads, customer satisfaction ratings, and other data points regarding a company.

AltIndex chart

It tracks this data over time, compares it to other companies, and then uses machine learning to generate investment insights. Stocks are given a ranking score out of 1 to 100, simplifying the analytical process that can often be very difficult for stock investors.

With over 10k members, AltIndex is a widely used and trusted service. It provides over 100,000 unique daily stock insights and alerts, and has a very impressive win rate of 75% from its AI stock picks.

You can try AltIndex’s Starter Plan for just $29 a month and receive stock picks directly to your email, as well as a range of other useful features.

Conclusion

Finding a great under-the-radar stock can be a solid way to gain wealth. Generally, these stocks haven’t yet been discovered, so they’re not overpriced. The critical point is you still need to find companies with solid, dependable returns that can be repeated and improved upon. 

Look for companies that have established a niche for themselves and are improving their revenue and earnings per share. Many under-the-radar stocks don’t have huge cash reserves, so they don’t handle big financial downturns as well. To prevent picking the wrong under-the-radar stock, find companies that should benefit from long-term trends.

References

https://investors.gigacloudtech.com/news-releases/news-release-details/gigacloud-technology-inc-announces-fourth-quarter-2023-and-year

https://investors.comfortsystemsusa.com/news-releases/news-release-details/comfort-systems-usa-reports-fourth-quarter-and-full-year-2023

https://ir.jd.com/news-releases/news-release-details/jdcom-announces-fourth-quarter-and-full-year-2023-results-annual

https://www.marketsandmarkets.com/Market-Reports/commercial-security-system-market-234307144.html

https://photronicsinc.gcs-web.com/news-releases/news-release-details/photronics-reports-first-quarter-fiscal-2024-results

https://www.cogentco.com/files/docs/about_cogent/investor_relations/reports/10k_report_2023.pdf

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Jim Halley
Editor
Jim Halley
Editor

I am an experienced journalist who has also worked as an editor and writer at the Savannah Morning News, Salt Lake Tribune, USA Today, Stars and Stripes, and The Motley Fool. I spent the first half of my career in sports journalism, but in recent years have switched to writing about my other passion, stocks, particularly healthcare, real estate and consumer staples stocks. I've won numerous journalism awards from the Associated Press and state press associations and have been a judge for the Georgia Sportswriters Association. I've written one non-fiction book, Just One More Time, about Georgia Southern football, and…