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Wall Street's Best Unknown Stocks

By Rich Duprey - Updated Apr 6, 2017 at 12:49PM

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These three stocks could help you swing for the fences.

When asked for the secret of his success, baseball player Wee Willie Keeler replied, "Hit 'em where they ain't." What worked for Willie at the plate applies equally well in investing. 

Seeking stocks that others ignore, shun, or simply forget gives individual investors like you an edge over the professionals. When Wall Street turns a blind eye, you have a chance to get in before these stocks get discovered -- or rediscovered -- and start taking off. 

Below, we'll check out companies with only a handful of analyst coverage, then pair our list with the opinions of the Motley Fool CAPS community. A stock that garners CAPS' top ratings, but hasn't yet caught analysts' attention, could be your next home run investment. 

Stock

CAPS Rating (out of 5)

Wall St. Picks

5-Yr. EPS Growth

General Steel (NYSE: GSI)

*****

4

1%

RAIT Financial Trust (NYSE: RAS)

***

3

14%

Yongeye International (Nasdaq: YONG)

****

2

38%

Source: Yahoo! Finance

Remember, without analyst support, you'll have to do your own scouting to see whether these stocks deserve a spot on your portfolio's roster. Don't just buy or sell them based solely on their appearance here. 

A utility player
Steel manufacturer General Steel has taken to heart the Chinese government's commandment to consolidate the industry. China wants the top 10 steel producers to consolidate half of domestic production this year, and bring 70% of production under their umbrella by 2020. To achieve its goal of being one of the largest, most profitable non-government-owned steel companies in China, General Steel is embarking on an aggressive campaign to acquire rival Chinese producers and introduce Western management practices.

The consolidation the government promotes is intended to ameliorate the overcapacity that was present in the system. Last month, China announced that it would not allow the construction of any new steelmaking facilities before the end of 2011.

While that might prove problematic in the long run for the likes of General Steel and China Gerui Advanced Materials (Nasdaq: CHOP), the pursuit of acquisition targets continues unabated. General Steel's sniping of a stake in Shanxi Meijin Iron and Steel in May shows that it's sticking to its plans.

CAPS member BossMan2010 thinks the steel producer will capitalize on the modernization under way in China:

Chinese infrastructure build will guarantee the success of this stock. Stock price is very low. 

All fun and games
Last month, I suggested that RAIT Financial Trust had been a bit premature in holding out hope that the commercial real estate market was finally poised for recovery. According to the market analysts at real estate data firm Trepp, delinquent commercial mortgage-backed-securities loans totaled 8.42% of total CMBS loans outstanding in May, while 11.7% of all CMBS loans are now with the special servicer, a new high.

In equally troublesome news, the FDIC says delinquent commercial and multifamily real estate loans held by commercial banks and S&Ls rose to $108.1 billion in the first quarter, a 59% increase over the year-ago period. Commercial vacancy rates are soaring, too, with research firm Reis reporting shopping-center vacancies of almost 11%. Even though retailers such as Costco and Nordstrom reported apparently robust sales numbers in May, many observers believe retail is doomed.

CAPS member PriestRock expects RAIT's stock to be volatile in the months ahead as a result. He plans to play the dips and tops:

Rait is oversold right now. And I've seen this stock take this type of nosedive before because of market sell-off. It just seems to be hyper sensitive to everything the market does. Its cnsistent in that respect. I start looking to buy when Riat goes below 2.30 and start to sell off at around 3.10-3.20 The wait time in between buy and sell is usually a couple of months. So far as Co. fundamentals, I,ve seen alot worse at alot higher prices. This Co. is a steal at its curent price. It wont last.

Kicking it higher
Another stock expecting volatility is Yongye International, a small Chinese fertilizer manufacturer. CAPS member rumymudda says China's economic situation makes such plays subject to market whims:

Good growth potential at a good price. It'll probably be quite volatile, and the short term outlook for China is risky, but long term this should be a big winner.

Chinese ag stocks like Yongye, Origin Agritech (Nasdaq: SEED), and China Green Agriculture (NYSE: CGA) have all fallen more 20% over the past three months, as China's economic growth is called into question. But with more than $50 million in the bank, and less than half a million dollars in outstanding long-term debt, Yongye has the financial wherewithal to achieve its goals.

Swing for the fences
When seeking investments where no one else is looking, Motley Fool CAPS is the best place to start your own research. 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. 

Sign up today for the completely free service, and tell us whether these hidden stock opportunities will help us go one up on Wall Street.

Costco Wholesale is a Motley Fool Inside Value selection and a Motley Fool Stock Advisor recommendation. China Green Agriculture, General Steel Holdings, and Yongye International are Motley Fool Global Gains picks. The Fool owns shares of China Green Agriculture, Costco Wholesale, and Yongye International. Try any of our Foolish newsletter services today, free for 30 days.

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.

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Stocks Mentioned

Yongye International, Inc. Stock Quote
Yongye International, Inc.
YONG.DL
General Steel Holdings, Inc. Stock Quote
General Steel Holdings, Inc.
GSIH
$0.00 (0.00%) $0.00
China Green Agriculture, Inc. Stock Quote
China Green Agriculture, Inc.
CGA
$4.65 (-0.48%) $0.02
China Gerui Advanced Materials Group Ltd. Stock Quote
China Gerui Advanced Materials Group Ltd.
CHOPF
Origin Agritech Limited Stock Quote
Origin Agritech Limited
SEED
$11.68 (0.26%) $0.03

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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