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 Azz to Innophos. 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, though the community thinks they still have outsized potential.


CAPS Rating (out of 5)

No. of Active Picks

Est. EPS Growth Next Yr.

Hanmi Financial (Nasdaq: HAFC)




Modine Manufacturing (NYSE: MOD)




StoneMor Partners (Nasdaq: STON)




Source: Yahoo! Finance, Motley Fool CAPS; NA = not available.

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. Make sure there's nothing seriously wrong with any company before you plug it into your own portfolio.

Under the radar
Almost 120 banks have failed so far this year, and since the FDIC usually announces new ones on Fridays, after the market closes, it's possible we'll have more added to the list today. West coast regional bank Hanmi Financial once looked like it was on the brink of being added, but after some aggressive raising of capital, it's seemingly stepped back from the edge. That doesn't mean it's not still a troubled institution, but it's working hard to deleverage its balance sheet and build up core deposits.

Regional banks seem to have fared the worst in the recession. Pacific Capital Bancorp (Nasdaq: PCBC) got socked when California was hit by the recession's temblor, and Citizens Republic Bancorp (Nasdaq: CRBC) ran off the road with the auto industry in Michigan. Those banks look like they're also on the road to recovery, and 60% of the CAPS members rating Hanmi think it is, too.

You can deposit your thoughts on the Hanmi Financial CAPS page, and let us know whether we should pay greater interest to its stock.

Rev those engines
The banks weren't the only ones who crashed along with the auto industry. Parts suppliers also ended up in the ditch, with Visteon and Lear ending up in bankruptcy. Modine Manufacturing, which makes heating and cooling systems for carmakers, hasn't had that same sort of brush with death. Like Johnson Controls (NYSE: JCI), it's enjoying the recovery underway in autos.

CAPS member agnesrwhitt earlier this year figured Modine was a strong enough company to weather the downturn and come out stronger in the end:

Modine has a very high standard of products to which it has met it's realiability to come to the very top of its performance! A very good and stable company even with the economy in a slump. There strong back ground has never proved them to be unstable in anyway. There employees have been given a very strong will power to see Modine perform at its peek!

That strength could be why 80% of CAPS members rating the auto-parts supplier see it beating the market. Use the Modine Manufacturing CAPS page to drive home your own opinion.

End of times
StoneMor Partners has been dancing on the grave of critics who think death-care is a dying industry. As the second-largest cemetery operator in the U.S., behind Service Corp (NYSE: SCI), StoneMor has seen its shares rise by 25% since May, when it was identified as a stock ready to roar.

While death rates may fluctuate, the Grim Reaper doesn't exactly offer us a wealth of alternatives. We'll all end up in the same place sooner or later, so while growth may slow, it is still growing.

CAPS member jell1234 thinks demographics will prove StoneMor's point: " Lots of baby boomers will die in the next 5 years and need StoneMar's services."

Keep a high profile
These three stocks hold a lot of promise -- but possess equally persuasive arguments against them. That's why you need to look beneath the headlines and press releases, to get a fuller picture of where your money is going.

Check into Motley Fool CAPS, and tell us whether these low-profile stocks are on their way to higher returns.

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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.