Many stocks tend to fly under the radar of the broader market. They may be new or financially uncertain, making investors wary. But even if the reasons most investors ignore a stock are legitimate, that doesn’t mean they don’t have long-term value.
Many under-the-radar stocks have the potential to break out big, and if you bet on them when they are being ignored by the rest of the market, you may be able to capitalize on the full bullish trend.
These may not be like the steady, low-volatility stocks you might be comfortable with, and you have to develop a healthy risk appetite to invest in them. But the reward may be proportionally attractive.
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A materials stock
The first thing you should know about Ivanhoe Electric (TSX: IE) is that the name is misleading. It’s a mineral exploration and development company based in the U.S. that applies cutting-edge technologies for the discovery of metals and minerals associated with electrical transmission and storage.
It leverages a proprietary technology called Typhoon, which the company markets as one of the most accurate Geophysical survey technologies currently in existence. It allows for the detection of water, oil, and minerals with traces of conductive metals as deep as 1.5 kilometres under the surface, which may often be missed by conventional surveys.
This proprietary technology can be instrumental for a range of mining and exploration companies, including battery metal extraction companies. The company has access to a wide range of exploration projects in the United States. The business model and especially the technology make it an intriguing business that might still be flying under the radar, because it’s new.
The stock has only started trading on the TSX in June 2022 and, so far, has risen about 64.5%. Assuming it keeps growing at this pace, it can easily help you double your capital in a couple of years.
An investment management company
Sprott (TSX: SII) is a name you would have come across if you invest in or are interested in precious metal exchange-traded funds (ETFs) and other funds. The company was originally rooted in precious metal funds and still has several precious metal bullion funds, ETFs, and equity funds in its portfolio. But the company has expanded its offerings to include energy transition metals like uranium and focuses on battery metals like lithium.
The precious metal focus, especially the gold funds it manages, can be a fluctuating entity. The demand for gold-related investments has risen in almost all shaky markets, but the energy-related funds and investment vehicles might experience a bullish long-term phase.
The world is already going through a major energy transformation, and if Sprott can leverage it, the stock may offer much more than the 71% it did in the last five years. The dividends at a 2.59% yield are another reason to consider this company.
Foolish takeaway
The two stocks may be on the verge of a breakout and enter a bull market phase, especially if big money starts moving in. If you buy now when the stocks are still mostly undetected, you can ride the potential bullish phase from the beginning. But the opposite is also true, and you may have to hold a stagnant or weakening stock for quite a while before it goes up or you decide to cut your losses.
