Wall Street's Best Unknown Stocks

When asked for the secret of his success, baseball player Wee Willie Keeler replied, "Hit 'em where they ain't." Wee Willie's wisdom applies just as well to to investing.

Looking for stocks that others ignore, forget, or shun on gives individual investors like you an edge over the professionals. Because Wall Street ignores them, you have a chance to get in before they're discovered -- or rediscovered.

Below, we'll check out companies with only a handful of analysts covering them, and pair that up with the opinions of the Motley Fool CAPS community. Stocks that fly under Wall Street's radar, yet sport top ratings from our investor intelligence database, could become your next home run investment.

Stock

CAPS Rating (out of 5)

Wall Street Picks

5-Year EPS Growth Estimate

Microvision (Nasdaq: MVIS  )

***

2

17.5%

NIVS IntelliMedia Technology Group (NYSE: NIV  )

****

0

NA

Zix (Nasdaq: ZIXI  )

****

4

20%

Source: Zacks.com, Yahoo! Finance, Motley Fool CAPS. NA = not available.

Of course, without analyst support, that means you're going to have to do your own scouting to see if these stocks are worth putting on your portfolio's roster. Don't just buy or sell them based on their appearance here.

A utility player
Analysts might be more excited than the market right now by the potential Microvision offers. Perhaps that explains why the microprojector maker has disappointed Wall Street several times over the past year. It failed to show a profit once again last quarter; coupled with dilution from share offerings, the miss sent its stock into a tailspin.

An $8.5 million order from a still-unnamed consumer electronics company helped shake things up earlier this month. But with first-quarter earnings expected this week, and the pair of analysts still anticipating a loss, Microvision's growing client roster may just help the company surprise to the upside this time. And if its mystery order is a picoprojector for Microsoft's (Nasdaq: MSFT  ) Zune or Apple's (Nasdaq: AAPL  ) iPod, as the website Engadget fancifully speculates, that major coup could launch this company into the stratosphere.

Whomever the actual customer turns out to be, CAPS member pandalion has high hopes:

this is one of those ground floor opportunitites that are few and far between. whether mvis grows organically, or is future tale-over target, the upside is HUGE!!!!

Remember this
While Microvision probably isn't teaming up with NIVS IntelliMedia Technology Group, the Chinese consumer electronics company found itself on a recent list of top stocks after receiving two orders from China Telecom (NYSE: CHA  ) valued at $28 million.

CAPS member PDueDiligence figures that even after a 7.3 million share offering that helped the CE player raise $22 million, NIVS still sports an attractive valuation:

NIVS moat is shallow but a low price to earnings ratio and increasing revenues mean an investor can pick up NIV on the cheap. NIV just completed its secondary offering. ... The post offering P/E ratio is 6.58 with an adjusted EPS of .50. NIV is increasing EPS by 30% YOY and should be fairly valued at a P/E of 8 or more.

PDueDiligence acknowledges the risk of customer concentration in NIVS -- four customers account for 35% of revenue. But with several catalysts presenting themselves in the immediate future, this CAPS members says the company should be able to maintain its growth trajectory.

It's palladium, my precious
After winding down its e-prescription business, Zix investors have been waiting for the rebound of its email encryption services. With first-quarter orders nearly doubling year over year, this could be the inflection point they've been expecting, as Zix prepares to report its first profit ever.

That might be enough to switch the views of some CAPS members, who recently suggested that Zix would underperform the market. Member longandshortofit said that with renewal rates dropping last year, Zix would have to sell more just to break even. Now, rising orders rising could prove the viability of the business:

Last year zixi's renewal rate dropped from 98% to 91%. That means that they have to sell 7% more to just break even on revenue. What is hurting though is that in order to keep the renewal figure from dropping even lower, zixi has had to lower prices. The latest appears to be $50/user/year. That's more than a 50% reduction!!! So that means they have to sell even more just to break even.

Whether that will be enough to overcome free email services like Google remains to be seen. Zix has been shopping itself, pursuing "strategic alternatives," and its new order volume may make it attractive to someone.

Who dat?
It pays to seek out investments where no one else is looking, and the best place to start your own research on these stocks is on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page.

Sign up today for the completely free service, and tell us whether these hidden stock opportunities will help us go one-up on Wall Street.

Microsoft is a Motley Fool Inside Value recommendation. Google is a Rule Breakers pick. Apple is a Stock Advisor choice. Motley Fool Options has recommended a diagonal call position on Microsoft.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.


Read/Post Comments (2) | Recommend This Article (17)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 29, 2010, at 10:42 AM, Lynxie22 wrote:

    There's also an enormous short position on this one, and any good news will also send it skyrocketing.

    http://www.shortsqueeze.com/?symbol=mvis&submit=Short+Qu...

  • Report this Comment On May 06, 2010, at 11:45 AM, manhattanbanker wrote:

    NOTHING DRIVES A STOCK PRICE HIGHER THAN ACCELERATING REVENUE GROWTH!

    expect mvis' 2010 revenue to increase by a factor of 10!!!

    what other company has this enormous potential!?

    mvis' TOTAL 2009 revenue was only $3.83 million dollars

    mvis has essentially accounted for a MINIMUM of > $30 million dollars of revenue in 2010!

    - mvis recently announced their first purchase order of $8.5 million dollars for their embedded picop

    - during mvis' q4 2009 conference call, mvis announced a back order of 40,000 units of their showwx laser pico projector which retails for about $549 - $1000 this back order should be filled soon if it hasn't already - which should generate around $22 million dollars alone

    based SOLELY on these 2 previously announced factors, expect mvis' 2010 revenue to multiply 2009 revenue by a factor of 10!!!

    from a technology standpoint, mvis has built a formidable "moat" around themselves with the strongest patent portfolio in their space - because of this, mvis may be a possible takeover target sooner than later

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