These 3 Under-the-Radar

Stocks Are Great Buys

Right Now
Wall Street hasn't caught onto these stocks...yet.

Jeremy Bowman (TMFHobo)

Mar 13, 2021 at 10:38AM
Author Bio

Just when you think the stock market is about to

settle down, things get crazy again.

Already in 2021, we've seen Reddit-fueled short

squeezes driving stocks like GameStop through the
roof. More recently, many of last year's biggest
winners have plunged as investors rotated out of
high-growth tech stocks and into more cyclical plays
like energy and financials as Treasury yields rose,
portending higher interest rates and confidence in
the economic recovery.

No one knows what will happen next, but it's always

a good idea to take a look at stocks that Wall Street
is ignoring for new potential investments. Keep
reading to see three such under-the-radar stocks
worth buying today: ACM Research
(NASDAQ:ACMR), PubMatic (NASDAQ:PUBM), and
Niu Technologies (NASDAQ:NIU).

IMAGE SOURCE: GETTY IMAGES.

A pick-and-shovel play in
semiconductors
ACM Research is a small-cap stock that's been
mostly ignored by the financial press despite
jumping more than 300% last year. The company is
based in the U.S., but does nearly all of its business
in China, giving it exposure to a fast-growing market
but with the protection of a U.S. domicile.

ACM makes equipment to clean semiconductor

wafers, a vital step in the production process, using
proprietary wet-cleaning technology, which makes it
a pick-and-shovel play in the sector. No matter
which chipmaker wins, they all need the kind of
cleaning equipment that ACM provides, making the
company a safer option than choosing from one of
several chipmakers in a cutthroat industry.

Its machines cost between $2 million and $5 million,

and its customers include some of the world's
biggest chipmakers, such as Semiconductor
Manufacturing International Corporation (SMIC),
Yangtze Memory Technologies, and Shanghai
Huahong Group.

Growth has been impressive at ACM lately. Revenue

jumped 85% year over year in its most recent
quarter, to $45.6 million, and unlike the companies
behind many high-growth stocks, ACM is profitable.
It finished last year with $23.8 million in adjusted net
income, good for a profit margin of 15.2%, and for
2021, management is estimating revenue growth of
31% to 47%. ACM is also in position to benefit from
the global semiconductor shortage, as that should
lead to capacity expansions and higher prices in the
industry.

The stock has been volatile along with much of the

tech sector and is currently down 40% from its all-
time high in February. Analysts expect the stock to
generate $2.45 in earnings per share in 2022,
making the stock a relative bargain today at a price-
to-earnings ratio of just 36 based on that estimate.

An ad-tech debutante
Recent ad-tech IPO PubMatic is far from a
household name and is currently only covered by a
handful of Wall Street analysts. Nonetheless,
PubMatic has made a strong debut at a time when
the ad tech industry has been on fire. Since listing
its IPO at $20/share in December, the stock has
more than doubled, and its fourth-quarter earnings
report -- its first one as a publicly traded company -
- shows why.

Revenue soared 64% to $56.2 million, and adjusted

EBITDA nearly tripled to $26.9 million, giving the
business an EBITDA margin of nearly 50%, showing
the company is highly profitable.

In the ad tech sector, PubMatic is a sell-side

platform (SSP), meaning it helps publishers manage
and optimize their inventory. Its customers
include NewsCorp, AMC Networks,
and Verizon Media group.

Like much of the rest of the ad tech industry,

PubMatic is benefiting from the pandemic-driven
acceleration in the shift to Connected TV (CTV), or
ad-based streaming television. In its fourth-quarter
report, PubMatic said that fast-growing advertising
formats, including mobile, digital, and CTV, made up
65% of revenue in the quarter. Omnichannel video
revenue more than doubled in the period, which
helped growth accelerate into 2021 as faster-
growing segments make up a larger percentage of
its business.

With the tailwinds from the growth of digital

advertising and a diversified customer base of more
than 1,000 publishers, PubMatic looks poised to be a
winner in the sector.

A different kind of electric vehicle

stock
Electric vehicle stocks have gotten a ton of attention
from investors over the last year, but most of the
focus has been on carmakers like Tesla and Nio.
However, the EV revolution also presents
opportunities in the micromobility space. One
intriguing stock here is Niu Technologies, a Chinese
maker of electric scooters, which only a few Wall
Street analysts have been watching.

Niu has delivered strong growth recently, showing

demand for EVs goes beyond cars. Unit sales in its
fourth quarter rose 42% to 150,000 e-scooters,
driving revenue up 25% to $103 million. Revenue
grew slower than units sold because Niu is
introducing lower-priced products to expand its
market.

Like other manufacturers, Niu was negatively

affected by the COVID-19 pandemic, which
presented both supply chain challenges and
demand disruption as lockdowns eliminated the
need to buy a new scooter. However, that should set
the company up for a strong 2021.

For the first quarter, the company is calling for

revenue to jump 80% to 105% as it laps the peak of
the crisis in China, though it still sees revenue being
down from the fourth quarter because of
seasonality. For the full year, Niu forecasts unit
growth of 50% to 83%, or 900,000 to 1.1 million,
showing the company will sell more vehicles than
Tesla.

If the electric vehicle revolution lives up to investor

expectations, there will be many winners. As a small,
fast-growing company valued with a unique position
in the sector, Niu looks set to be part of that group.

This article represents the opinion of the writer, who

may disagree with the “official” recommendation
position of a Motley Fool premium advisory service.
We’re motley! Questioning an investing thesis --
even one of our own -- helps us all think critically
about investing and make decisions that help us
become smarter, happier, and richer.

Jeremy Bowman owns shares of ACM Research, Inc. The

Motley Fool owns shares of and recommends Tesla. The
Motley Fool owns shares of NIO Inc. The Motley Fool
recommends Verizon Communications. The Motley Fool
has a disclosure policy.

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