Hidden Stocks for High Returns

Like the song says, investors are looking for stocks to love in all the wrong places. They'll pile into the momentum stocks everyone else buys, but ignore lesser-known opportunities for fear of straying from the crowd.

Yet the search for undiscovered jewels has informed many of our Motley Fool Hidden Gems picks, from Autoliv to Nuance Communications. Overlooked by Wall Street and Main Street, and thus often undervalued, these stocks hold the best potential to deliver outsized returns.

The Motley Fool CAPS community knows a bargain when it sees one. Below, you'll find several under-the-radar stocks that brim with promise. These companies have garnered 100 or less active recommendations on CAPS, despite having double-digit earnings growth potential next year.

Source: Yahoo! Finance, Motley Fool CAPS.

Naturally, we want you to look a bit closer at these stocks before buying. Maybe investors are staying away from these stocks for a reason so make sure there's nothing seriously wrong with the company before you plug it into your own portfolio.
Under the radar
Our thirst for oil is boundless, and even if BP (NYSE: BP) has contained its Gulf ecological disaster -- so far -- having a diversified energy supply becomes essential. Investors in Cenovus Energy, like highly rated CAPS All-Star member MystixX, think oil sands drillers will be a big winner in the move away from ecologically sensitive areas.

Not that oil sands don't have their detractors. Canada's largest oil sands producer, the Syncrude Canada, partially owned by ConocoPhilips (NYSE: COP), was recently found guilty of causing the death of 1,600 ducks because of an oil-contaminated pond, and faces fines of up to $773,000.

Canada is rich in oil sands assets, though low crude prices make tapping them more uneconomical. The Alberta oil sands region of western Canada is estimated to have 175 billion barrels of oil in the Western region of the country, which compares favorably with the more than 260 billion barrels of oil in Saudi Arabia. When crude prices soared into the stratosphere, there was a black gold rush north of the border. The shake out that ensued when prices collapsed tended to leave just the more financially sound companies around.

But prices are climbing once again, and perhaps more importantly, China is taking an interest in oil sands. Sinopec is China's second largest oil company and it was the one to purchase ConocoPhilips' 9% stake in Syncrude. Suncor (NYSE: SU), another big Canadian oil sands player, has a 12% stake in the company.

Cenovus, however, is the sleeper here. It has large deposit assets all its own, and equally important, it is lower production costs from them. In the first quarter Cenovus was able to reduce operating costs per barrel at two of its sites by 28% due to higher production volumes and lower maintenance and repair activities.

Shares are down 5% over the past month, but with earnings expected to grow 17% next year, Cenovus Energy could be a cheap entrance into a plentiful oil supply.

Rev those engines
Had you purchased shares in the new-and-improved CIT Group as it came out of bankruptcy late at the end of last year, you'd have done quite well for yourself . Where the market is down 3% year to date, CIT has risen by more than 30%.

Buying what amounted to junk at the time might not have been worth the risk -- it did go through bankruptcy after all. The CAPS community is pretty evenly divided in their view of whether CIT can continue to outperform the broad market averages. Just 52% of those rating the lender think it will. Why not head over to the CIT Group CAPS page and deposit your thoughts on whether its time to join the investing superstars.

Sticking to it
Our wonderful high-unemployment recovery, if recovery it is, means that the value proposition of deep discounters Dollar General, Dollar Tree, and 99-Cents Only (NYSE: NDN) will only become more attractive.

With estimated growth north of 18%, ahead of 99-Cents Only and Dollar Tree expectations, it's easy to see why NoDoughBro sees Dollar General as an obvious value:

Sure it serves the low income population. But doesn't Wal-Mart serve the same population? This one is a no brainer. 

Keep a high profile
Sign up today for the completely free Motley Fool CAPS service, and tell us whether these low profile stocks are on their way to higher returns. There you can 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.