Tech heavy weights have undoubtedly revolutionized the world we live in. Household names like Apple and Microsoft are widely considered to be disruptive forces in the industry, offering innovative approaches with their respective products. This is perhaps why investors will often turn to these more well-known giants when searching for investments capable of bringing home the bacon.
However, the pros on Wall Street suggest going about this in a different way. Many analysts believe that while harder to spot, lesser-known stocks can make more compelling investments as some offer significantly larger upside potential than other top dogs.
With this in mind, we’ve opened the TipRanks database and pulled up three under-the-radar stocks that just received a thumbs-up from the analysts. There is upside here, along with some risk – but for investors willing to shoulder that, here are some unexpected picks from the Street.
HireQuest, Inc. (HQI)
The first stock we’ll look at, HireQuest, provides client companies with on-demand and professional staffing and recruiting solutions. In short, it’s a manpower agency, aiding in building up the workforce in a range of industries, including administrative and clerical, construction, engineering, healthcare, hospitality, legal, light industry, logistics, and manufacturing. HireQuest operates on a franchise model, and pursues an aggressive expansion policy through acquisitions.
This past year has been good for HireQuest. The economic reopening, and the increase in worker ‘churn’ as quite rates rise and workers are more open to seeking new positions, put its services in demand, and the company’s most recent quarterly report, for 3Q21, showed the highest top line in over two years. Revenues were reported at $6.5 million, up 103% from the 3Q20 result of $3.2 million. EPS came in at 23 cents per dilute share, beating the 16-cent forecast and rising 53% year-over-year. The company is scheduled to deliver 4Q21 results early on March 15.
HireQuest had $4.8 million in cash on hand at the end of Q3, and in February of this year declared its regular quarterly dividend, of 6 cents per common share. The payment is due out on March 15. The current payment is the fourth at the current rate, and the seventh since HireQuest started paying dividends in the summer of 2020. The annualized rate of 24 cents per common share gives a modest yield of 1.4%.
Also in February, HireQuest closed on two new acquisitions, turning potential competitors into franchisees. In February 22, the company closed on the agreement with Dubin Group and Dubin Workforce, which provide executive placement services and commercial staffing. And on the last day of the month, HireQuest closed on its acquisition of Northbound Executive Search.
Covering HireQuest for Barrington, 5-star analyst Kevin Steinke reminds investors that there are considerable gains in store for HQI in 2022. Steinke rates the stock an Outperform (i.e. Buy), and his $29 price target implies an upside of ~63% on the one-year time horizon. (To watch Steinke’s track record, click here)
Backing his stance, Steinke wrote: “The company’s franchised model results in greater earnings stability and higher margins relative to competitors that use company-owned offices. In addition, we expect HireQuest to grow faster than its larger competitors. We believe these factors justify a higher valuation for HireQuest compared to its peers.”
While there are only two analyst reviews on file for this stock, both agree that it’s one to Buy – making the Moderate Buy rating unanimous. The average price target is $27.50, which suggests room for a 61% upside from the current share price of $17. (See HQI stock analysis on TipRanks)
Duos Technologies Group (DUOT)
Next up, Duos, operates in an essential niche where the tech and security industries meet. The company provides a range of sophisticated, AI-driven tech solutions and platforms to transform railroading, logistics, and intermodal transport systems. The company’s technology products are in heavy use in the railroad industry, as an integral part of the rail corridor and portal inspection operations. Duos systems are in use with international railroad border crossings, trucking companies with large-scale distribution tracking needs, and even for surveillance in the correctional and prison industry.
Near the end of 2021, in mid-December, Duos secured a railroad car inspection portal contract with CSX Transportation, one of the largest rail and intermodal transport companies in the US. The contract marks Duos’ third railcar inspection portal with CSX. The new portal is scheduled to be installed by the end of 2Q22.
And as 2022 got started, Duos announced a $2.7 million railcar inspection portal contract at the Southwest border of the US. The contract, announced on January 27, is with an undisclosed Class I rail operator, for a new inspection portal at the operator’s Southwest border crossing. The new portal is expected to be installed and operating by the end of this year.
Duos typically shows its highest revenues in the final quarter of the year, and preliminary data released for 4Q21 bear with that pattern. Q4’s top line is predicted at $3.75 million, in-line with the $3.78 million reported in the year-ago quarter. The company is expected a quarterly net loss, in the range between $250,000 and $294,000; this would, however, represent a 31% improvement even at the high end.
Looking ahead, Duos expects 2022’s top line revenue in the range between $16.5 million and $18 million. This will represent a major jump in revenue, more than doubling the 2021 total.
Michael Latimore, 5-star analyst with Northland Securities, likes what he sees in this unique security automation company. Noting that Duos in a position to create its own market, Latimore writes, “We estimate Duos can generate $16.7 million in FY22 revenue and $24.1 million in FY23. This should lead to an EBITDA loss of ($3.1) million in FY22 and break-even in FY23. These estimates are based on current backlog and do not include new wins. Catalysts for the stock could be: on-time deployment of backlog, more class 1 wins and expansions, expansion at Amtrak, wins in the truck and international markets, and reaching positive EBITDA.”
In line with his bullish stance, Latimore rates DUOT a Buy, and his $10 price target implies room for ~67% upside potential in the next 12 months. (To watch Latimore’s track record, click here)
Some stocks slip under the radar, picking up few analyst reviews despite sound performance, and this is one. Latimore’s is the only recent analyst review on record here. (See DUOT stock analysis on TipRanks)
Nuvectis Pharma (NVCT)
We’ll wrap up with a microcap biopharmaceutical company, Nuvectis. This firm is focused on the precision medicine niche, working on new drug candidates that will target specific unmet needs in the treatment of cancer. The company uses a variety of methods, including target selection, drug profiling, and clinical execution, to build up its research pipeline.
Currently, the company has two candidates under clinical evaluation. NXP900, an oral small molecule SRC/YES1 inhibitor, is in preclinical research stages as a potential candidate for a large number of solid tumor cancers, including colon, prostate, pancreatic, ovarian, head and neck, and esophageal malignancies. The drug’s wide range of action is a results of its development as an inhibitor of both the SRC and YES1 pathways.
The lead candidate, NXP800, is another orally dosed small molecule drug, this one a HSF1 (heat shock factor 1) pathway inhibitor. The company is setting its initial target for NXP800 against ovarian clear cell carcinoma (OCCC) and relapse/refractory endometrioid ovarian cancer. Both are serious cancers, and both have high unmet medical needs. Nuvectis initiated a Phase 1 trial of NXP800. The two part trial will be conducted in the US and the UK. The part currently underway in the US, Phase 1a, is a dose escalation/safety and tolerability trial of this potential first-in-class drug.
To raise new capital and funding for its clinical program, Nuvectis went public in February of this year. The IPO saw the company put 3.2 million shares of stock on the market, at $5 each, and raise gross proceeds of $16 million. NVCT closed at just $3.25 on its first day of trading, but has since more than doubled.
H.C. Wainwright analyst Joseph Pantginis is somewhat gung-ho on this stock, writing of it: “Ground floor opportunity in precision oncology; we’re excited about the early path… We believe the company has made thoughtful moves for its pipeline and is favorably placed within the precision oncology arena. Operations started in 2Q21 and inlicensed two oncology assets, the first of which is now in the clinic… We expect 2022 to generate important profile building data for both assets from: (1) clinical data flow from the recently started Phase 1a with NXP800 in advanced solid tumors; and (2) additional preclinical data and IND filing for NXP900.”
To this end, Pantginis sets a Buy rating on NVCT shares, and his $14 price target is indicative of ~67% upside potential for the year ahead. (To watch Pantginis’ track record, click here)
NVCT has slipped under most analysts’ radar; Pantginis is the only bull in the picture right now- with the stock displaying a Moderate Buy analyst consensus. (See Nuvectis stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.