In today’s market, anyone can look smart saying that stocks like NVIDIA (NASDAQ:NVDA) or Meta (NASDAQ:META) are good investments. However, the best investments are often found by investors identifying overlooked stocks that the rest of the market has yet to catch up on. If you can enter these stocks at the right time, the returns have the potential to be life-changing over a long enough period. Imagine entering NVIDIA before it was a billion-dollar company!
So how can we identify these overlooked stocks ready to take the next step? Well, the best way is proper due diligence and research for fundamental catalysts like an industry-changing product, or stellar year-over-year financial growth. In this article, we’ll highlight three such overlooked stocks that are still flying under the radar for most investors.
Despegar.com (DESP)
If you are from the States, there’s no need to be embarrassed if you have never heard of this company. Despegar.com (NYSE:DESP) is a leading Latin American online travel technology brand. As of now, six analysts have given DESP a projected one-year average price target of $14.42 and a high-end target of $19.00.
Despegar.com offers a unique opportunity to invest in a regional travel industry flattened by the pandemic. It offers the largest selection of regional airlines and accommodations through an award-winning mobile or desktop app. Through its acquisition of Koin, Despegar has since entered the buy-now-pay-later market and is expected to continue growing its addressable market into entirely new customers.
In the most recent quarter, Despegar saw strong profitability and beat consensus earnings estimates by 120%. However, while DESP is trading a minimal price multiple at just 1.6x sales, some investors might worry about larger fish entering the waters. While other incredible Latin American stocks like MercadoLibre (NASDAQ:MELI) are already eyeing DESP for a potential acquisition, we see DESP’s current rise into the limelight as a great opportunity for investors to diversify into a relatively cheap local industry leader.
PinDuoDuo (PDD)
PinDuoDuo (NASDAQ:PDD) is usually not the first Chinese tech stock investors think of. It has often been overshadowed by stocks like AliBaba (NYSE:BABA) and Tencent (OTC:TCEHY). Wall Street analysts are well aware of the potential for PDD as they have an average price target of $201.09 with a street-high price target of $276.72. The high-end price target indicates more than 70% upside from its current price.
This company exploded during the pandemic with its agricultural eCommerce platform that connected farmers directly with consumers in China. Now, PinDuoDuo has launched its discount marketplace Temu in more than 50 markets worldwide. The result? PinDuoDuo reported a 130% year-over-year rise in revenue and 245% year-over-year growth in net income during the first quarter of 2024. Earnings-per-share jumped by 99% from the same quarter in 2023.
PinDuoDuo has always traded with a China discount. Shares are trading at just 13x forward earnings and 5.5x sales. On a price multiple basis, the stock is cheaper now at a $218 billion market cap than when it had a $100 billion market cap. At this rate, don’t be surprised if five or ten years from now, PinDuoDuo is the best-performing Chinese ADR stock on the market!
OnOn Holdings (ONON)
We complete our list of three overlooked stocks with our third international company: OnOn Holdings (NASDAQ:ONON). In May, 16 of 21 analysts rated the stock a Buy or Strong Buy. They also have an average one-year price target of $39.66, with the highest target being $54.51.
OnOn has taken the running apparel and footwear world by storm. You might not recognize the brand by name, which goes by On Cloud, but you have likely seen the unique-looking shoe styles. Earnings in the most recent quarter beat estimates by 128% and On saw a 105% year-over-year growth in quarterly net income. One of the biggest growth drivers behind this performance has been ONON’s commitment to growing its number of high-profile investors and athletes including Roger Federer as a core marketing strategy.
The company is in high-growth mode right now and trades at a fairly high multiple. Shares trade at 42.7x forward earnings and 12.6x sales. With ONON expected to ramp up marketing again this summer and into the next Olympic games, investors should look out for key pullbacks for the chance to buy into this amazing growth trajectory.
On the date of publication, Ian Hartana and Vayun Chugh did not hold (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.