Investors can profit when catalysts cause overlooked and underappreciated stocks to show up on Wall Street's radar. However, not every off-the-beaten-path stock is worth buying. We asked some of our top Motley Fool investors to scour the market for underfollowed companies they think can be bought now. At the top of their list are Jounce Therapeutics (JNCE), Snap-On (SNA -0.67%), and Baidu (BIDU -4.67%).

Are these stocks right for your portfolio?

Ignoring this biotech could be a mistake

Todd Campbell (Jounce Therapeutics): Clinical-stage biotech stocks are often overlooked by Wall Street until they report positive trial data. As a result, it could be a good time to buy Jounce Therapeutics ahead of midstage trial results for its lead product candidate, JTX-2011.

A businessman looking through binoculars.


JTX-2011 is a cancer drug that's being evaluated as a monotherapy and in combination with Bristol-Myers Squibb's multibillion-dollar PD-1 drug, Opdivo. It stimulates the immune system by activating the Inducible T cell CO-Stimulator (ICOS) protein that's found on certain T cells within tumors.

Typically, cancer drugs are evaluated in trials enrolling patients with one type of cancer, such as lung cancer. However, that's not the case with JTX-2011. ICOS is expressed on effector cells across a number of cancer indications, so its trial is evaluating it in six different solid tumor indications, including lung cancer. JTX-2011 is additionally intriguing because it may help PD-1 drugs work in patients who wouldn't typically respond to them. PD-1 drugs are among the world's best-selling cancer drugs, so the potential for JTX-2011 to be used alongside them is significant.

Assuming that JTX-2011's trial data is good, it's possible that regulators will consider giving it an accelerated or conditional OK, especially for use in advanced cancer patients with limited treatment options. If so, then JTX-2011 has a good shot at hitting the ground running because Jounce has inked a co-commercialization deal with the biotech Goliath Celgene (CELG)

Admittedly, there's no guarantee that JTX-2011's data will be good, and that makes this a high-risk stock. Nevertheless, if this trial pans out, I think there's potential for this company's shares to trade significantly higher. The cancer-treatment market is enormous, yet Jounce's market cap is just $844 million and only four analysts cover it, according to Yahoo! Finance. Since Jounce is underfollowed, its shares could rally if more analysts initiate coverage with a buy, following its JTX-2011 data.

This stock could make growth a snap

Rich Duprey (Snap-On): Shares of automotive hand-tool maker Snap-On have risen 30% from their 52-week lows. With earnings on the table on Feb. 8, analysts are betting the company's going to miss consensus estimates. The bear case is that the company relies too much on financing its franchises, which now account for more than a quarter of operating profits compared to 4% from 2010, and collections on receivables are worsening.

Management, however, says financing's contributions to the overall total are overblown when the situation is looked at as a whole, and slowdowns in sales last year were due more to adjustments in inventory than slack demand. It also doesn't expect charge-offs to worsen.

Snap-On has made several acquisitions over the last year or so, which gives it great opportunity to expand internationally. It continues to enhance its franchise network, while also expanding its relationship with repair-shop owners. And despite pockets of occasional weakness, Snap-On's main business segments all show solid growth prospects over the long haul.

The economy is performing the best that it has in years, and car-rating service says that, although values for 10- to 15-year old cars is stagnating a bit, they remain consistently higher for these cars, reflecting their demand. They represent just under 10% of all used-car sales, suggesting there will be a ready market for their repair, even if used-car sales, in general, are slowing.

Snap-On pays a dividend of $3.28 per share that yields a modest 1.8% annually, but with Wall Street's bearish outlook, an upside surprise could send shares soaring.

A red envelope filled with Chinese paper money with coins tied with red yarn resting on top of it.


The Google of China

Danny Vena (Baidu): Many investors tend to be U.S.-centric in their thinking. While that's easy to understand, it also can result in lost prospects. Expanding outside national borders provides a world of opportunities.

Consider China, with its population of 1.37 billion consumers and 700 million internet users -- more than twice the number in the U.S. Even across hemispheres, the common thread among online users is search. That's why investors should check out Baidu, the "Google of China."

Baidu dominates local search in the country, controlling more than 70% of the market. The company still generates 85% of its revenue from search, but has its sights set firmly on the future.

The company realized early the trend toward mobile internet, allowing it to make the transition and maintain its leading position. Baidu was also among the first to see the potential for artificial intelligence (AI) and is the leader of AI in China, and has some of the top programs worldwide.

Baidu is home to some of the foremost minds in AI, and this can be seen across the company's products and services. From improved search results to smart speakers to autonomous driving, AI is integrated into the company's operations.

Baidu is also home to iQiyi, the leading streaming service in China, which has an estimated 442 million monthly active users and 33% of the coveted 25- to 30-year-old demographic. Baidu may spin off the streaming company in 2018.

The company hasn't been without the occasional misstep. Its investments in the online-to-offline (O2O) market never gained significant momentum, and regulators took a particular interest in the advertising practices of questionable medical companies.

In its most recent quarter, Baidu saw revenue that grew 29% year over year, and net income that soared 156% over the prior-year quarter.

Wall Street is overlooking this stock -- don't make the same mistake.