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 Atheros Communications to Portfolio Recovery Associates. Overlooked by Wall Street and Main Street, and thus 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 fewer active recommendations on CAPS, despite having double-digit revenue growth potential next year.


CAPS Rating
(out of 5)

No. of Active Picks

Est. Revenue Growth Next Year

Antares Pharma (NYSE: AIS)




Biodel (Nasdaq: BIOD)



51% (Nasdaq: LOCM)




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
It has a ways to go before it becomes profitable, but Antares Pharma has been steadily narrowing trailing losses each and every quarter since 2008. Focusing on self-injectables and topical gel-based products, the tiny pharma is teaming up with larger partners like Teva Pharmaceutical (Nasdaq: TEVA) and BioSante Pharmaceuticals (Nasdaq: BPAX) (itself a hidden growth candidate) to develop and market its products.

With a $125 billion market in biologic drug injectables alone, there's little wonder why some investors think Antares can inject some profits into the picture soon. CAPS member ChrisFs sees the partnership route as allowing it to keep its costs low:

This pharma stock makes injectors and patches that deliver drugs to the body. They partner with drug companies and get to share in the success of new drugs in the sales of injectors without having to spend lots of research to develop the drugs themselves. There is an opportunity for them to do well on this.

Rev those engines
As Biodel approaches its October PDUFA deadline for its ultrarapid-acting injectable insulin Viaject, CAPS biotech guru zzlangerhans penned a highly readable warning on the danger inherent in an investment here. The "Bottle Imp" ensures that whatever you end up paying, it will be a price that's too dear for the risk.

Because Biodel has excluded from its application data that would negate the positive impact it says Viaject causes, zzlangerhans is essentially looking for the FDA to reject the application. Yet since hope springs eternal, expect to see shares run up in the period before the PDUFA date as investors seek out someone else to foist the Bottle Imp onto.

zzlangerhans also details how Alkermes, Poniard Pharmaceuticals, and even Dendreon (Nasdaq: DNDN) all fit the same mold Biodel is currently forming, and all had similar disastrous results. This parable is enough for CAPS All-Star TSIF to bet on a short-term surge in price:

Playing the "bottle imp" as this progresses to FDA in October. I don't like it's odds, but I have also seen biopharms price shoot up in the interim betweeen results and the FDA decision.

Of course, if the FDA agrees with Biodel that the anomalies observed in the Indian subset were the result of their being compromised due to excessive heat exposure, then this stock could take off.

Open spaces
Think globally, act locally might be how search specialist manages its business. By piggybacking on the strength and reach of much larger rivals like Google (Nasdaq: GOOG) -- it generated 57% of its website traffic through search engine marketing campaigns -- was able to bolster guidance well beyond what the Street was expecting.

Considering the price has dropped since the search shop announced its forecast, CAPS member EPS100Momentum sees this as a buying opportunity:

Boosted Q2 and full year Guidance. But due to mkt pullback shares actually down since announcement on 6/2/10

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.

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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.