Great Stocks That Wall Street Ignores

A great way for individual investors to make big money in the market is to look for great stocks that Wall Street isn't tracking. Far be it from me to say that the Wall Street big wigs aren't providing excellent advice, but we think many 10-bagger opportunities are out there in the stocks that lack a broad analyst following. Why should you compete against the fifty or so firms covering Apple when you can find companies that are generating consistent revenue growth, are fairly priced, delivering value for shareholders, and are relatively unfollowed by Wall Street analysts? And if you can find them first, you can swim in the profits from your investment as Wall Street inevitably piles into market leading stocks.

Motley Fool CAPS offers a variety of resources to aid Fools in finding tomorrow's leaders. Our 170,000-member community is full of investors helping each other beat the market. We'll enlist CAPS to screen for attractive opportunities unnoticed by Wall Street analysts. CAPS' nifty screener will help us find stocks:

• With consistent revenue growth (e.g., revenue growth averaging >20% over the last three years)
• At attractive prices (e.g. price-to-sales <1.2)
• Delivering value for shareholders (e.g. ROE > 20%)
• Unfollowed by Wall Street (no major analyst coverage)

Do we have a winner?

We have two contenders to look into. CAPS Member BSHumphreyII sounds a cautionary note on VSE Corp.:

I loved the fundamentals of this company, but was absolutely burned by this pick when VSE lost their Rapid Response 3G contract. Just shows you the risk inherent in betting on the government acting in a certain way, especially when a company's revenue is hugely dependent on a single contract. That sort of exposure to a single bureaucratic office is dangerous.

I'm keeping it as an outperform now, though, as the loss of the contract is more or less priced in, and there is the outside chance that their protest will be successful and the Army will reconsider the contract, sort of like what happened with Boeing in the KC-X fiasco.

Recently, VSE won a 42.MM contract from the U.S. Navy, which should help propel this company forward, but no doubt our CAPS community member is right -- a company that relies heavily on government and military contracts deserves a lot more scrutiny beyond our simple screen.

Before committing to further due diligence with VSEC, let's dig into NIVS IntelliMEdia Technology Group. Fortunately, CAPS member Ultralong has done a fair amount of digging for us:

NIVS IntelliMedia Technologies valuation here makes absolutely no sense. NIV is down over 45% from its highs after reporting consistently great quarterly reports...Tell me how the following numbers strike you:

2005: 22M in revenues, .07 in full-year EPS
2006: 38M in revenues, .19 in full-year EPS
2007: 78M in revenues, .31 in full-year EPS
2008: 144M in revenues, .41 in full-year EPS
2009: 185M in revenues, .59 in full-year EPS
2010: 215M-230M(est) in revenues, .68 (my est.) in full-year EPS

Internal growth is averaging, AVERAGING 25%! They just launched their mobile phone business in the past year and it is already expected to generate 60-90M dollars in revenue in 2010. Shareholder equity has been on the rise from 2006, rising from 2M then to over 86M now, placing this at a price to book of just 1.2! It's forward price to earnings ratio is just a tad UNDER 4! With a long-term growth rate closer to 22%,that means a PEG ratio of just 0.18 which makes it one of the least expensive growth stocks around I'm sure. Every sector of their business is showing double digit growth... this drop in share price makes no sense at all and is the perfect opportunity to dive into a great growth story on the cheap! I think I am being fairly conservative in my forward estimates, but I fully expect NIV to be worth $6.50 based on the growth we've witnessed over the last few years and given their current growth projections. The timeframe is 12-16 months.

We know better than blindly investing in a China growth story, particularly with a thorough evaluation of NIVS accounting practices. Still, it looks like we have two good candidates -- VSEC and NIVS -- ready to one-up Wall Street.

But as always, Foolish investors do a lot more due diligence before investing real money. If you're looking for stocks flying under Wall Street's radar, come join us in CAPS. Fool on!