If you want to own stocks that are massive winners, you most likely need to buy before they become household names. That means buying with a contrarian bent, not after shares have already gone up by 10x in just a few years. Buying Nvidia and Palantir Technologies in 2023 was smart, but you can't necessarily say the same thing about these stocks after rising 1,000% in just a few years' time.
Today, investors would do well to avoid overvalued artificial intelligence (AI) stocks that have already catapulted higher. Search instead for underfollowed and undervalued stocks that could become the future Nvidias and Palantirs of the stock market in 2026 and beyond.
Nintendo (NTDOY +0.00%) and Crocs (CROX 0.38%) are two stocks I am buying hand over fist before they could soar higher in 2026. Here's why these are great buys for investors as we head to the end of the year.
OTC: NTDOY
Key Data Points
Nintendo's profit inflection
Many people know of the Nintendo gaming brand, but few think to invest in this Japanese stock. The company dominates family-friendly gaming entertainment with its Mario, Zelda, Animal Crossing, Pokémon, and many other franchises that are beloved by tens of millions of people around the globe.
Nintendo got its mojo back over the last decade with the hybrid gaming console called the Nintendo Switch. This device allows players to game with a handheld device that can also connect to a TV for at-home gaming, a revolution in the gaming industry that led to the Switch selling over 150 million units since its release in 2017.
Now, Nintendo has come out with the next generation of the device called the Nintendo Switch 2. Through just the first few weeks after launch, the new device sold close to 6 million units, showing how popular Nintendo is with its core gaming customers. Over the holiday quarter and this fiscal year ending in March of 2026, analysts are expecting Nintendo to sell over 20 million and perhaps 25 million Switch 2 units.
What does all this mean for Nintendo's stock? Well, if Nintendo keeps getting the Switch 2 into more customers' hands, those customers will buy Nintendo games and software packages. These games are the leading profit driver for Nintendo, meaning the more hardware it sells, the more profit it will make. Over the last 12 months, Nintendo has generated just $2 billion in net income.
Back at the peak of the first Switch, Nintendo was generating $4 billion in annual net earnings. With a higher selling price for the Switch 2 and its associated games, along with other monetization initiatives like movies and theme parks, Nintendo is set up to greatly surpass these earnings figures over the next few fiscal years, especially if the Switch 2 keeps selling like gangbusters.
All this makes Nintendo a perfect stock for investors to buy heading into 2026.
Image source: Getty Images.
A Crocs turnaround built on international growth
The shoes may be deemed "ugly" to some, but Crocs has built its easy-to-wear plastic sandals into a $4 billion business over the last two decades.
Today, the stock is trading at a cheap enterprise value-to-EBIT (earnings before interest and taxes) ratio of just 6. It is important to use enterprise value when analyzing Crocs stock because of the debt on its balance sheet, and it is also better to use EBIT instead of bottom-line net income because of some non-cash goodwill charges over the last 12 months.
Crocs' stock has struggled in the last few years for two reasons. First, it made an ill-timed and overpriced acquisition of the HeyDude shoe brand, which has seen declining revenue over the last few years, and with poor profit margins. Brand revenue declined 4.2% year over year in constant currency last quarter.
Second, the Crocs brand has begun to slow down in North America. Total Crocs revenue was up 4.2% year over year on a constant currency basis last quarter, but that was mainly due to international growth of 16.4%.
NASDAQ: CROX
Key Data Points
Even though Crocs has faced headwinds, the stock is mighty cheap right now while the business is doing swimmingly internationally. Revenue growth in China and other markets has been outstanding, with international revenue now higher than sales in North America. Plus, Crocs management is buying back a lot of stock, with shares outstanding down 17% cumulatively in the last five years.
Crocs' brand should begin to stabilize in North America, and the struggles at HeyDude are already well priced into this stock. Buy Crocs at a cheap earnings ratio of 6, and you will be well-rewarded in 2026.
