Underappreciated Investments: 14 Opportunities to Watch in 2024
As the new year kicks off, investors are looking for smart ways to profit. While some stocks may have dominated the headlines last year, it’s important to widen the lens and search for new, under-the-radar investment opportunities. Stifel Research has recently rounded up their favorite underappreciated investment ideas for the fourth quarter of 2023, offering opinions on mergers, industry-wide opportunities, and single-stock recommendations.
Alector Inc: A Biotech Gem with 88% Upside Potential
One of Stifel’s recommendations is Alector Inc (ticker: ALEC), a biotechnology company focused on developing novel medicines for neurodegenerative diseases. Alector is a pioneer in the nascent field of “immuno-neurology”, an area of research focused on the interaction between the immune system and the brain. Stifel upgraded ALEC to a Buy rating and raised their target price to $15. They believe the probability of success for Alector’s AL002 (TREM2 agonist) is above average, and the stock’s risk/reward is highly attractive ahead of phase two data expected in the fourth quarter of 2024.
Alphatec Holdings: A Turnaround Story with Strong Momentum
Alphatec Holdings (ticker: ATEC) is another underappreciated investment opportunity highlighted by Stifel. Over the last decade, ATEC has undergone multiple turnaround iterations and underperformed in the market. However, since 2017, with the appointment of Pat Miles as CEO, the company has found its footing and implemented growth accelerating initiatives. Stifel sees a long runway for momentum in ATEC, driven by portfolio innovation, sales channel optimization/expansion, and a clearer path to breakeven and positive cash flow levels. Stifel’s analysis suggests the new cash on hand could drive $700 million in surgical revenue in 2025, compared to $470 million in ATEC’s long-range plan.
Darling Ingredients: Unlocking the Potential of Low-Carbon Fuels
Stifel believes Darling Ingredients (ticker: DAR) is an underappreciated investment opportunity due to the market’s overreaction to the collapse of D4 Renewable Identification Number (RIN) prices. DAR is a leading company in low-carbon renewable diesel and sustainable aviation fuel, with exposure to complementary specialty and industrial products businesses. Stifel views DAR as the best vehicle to express a bullish view on low-carbon renewable diesel and sustainable aviation fuel growth, with best-in-class margins and exposure to the high-growth collagen peptide market and green energy in Europe. Despite these advantages, DAR currently trades at a discount to its closest peer. Stifel’s price target for DAR is $123, implying a potential upside of 143%.
Globus Medical: Best-in-Class Spine Company with Growth Potential
Globus Medical (ticker: GMED) is considered by Stifel to be the “best-in-class” publicly traded spine company. With a history of crisp clinical and commercial execution, the company has achieved sustained, well-above market growth and unmatched 30%+ EBITDA margins. Although the recent NUVA transaction brought pessimistic sentiment and a discounted valuation, Stifel believes GMED should get more credit than is currently being discounted. The company’s national sales meeting in January may provide proof that the NUVA integration is tracking on-plan. Stifel has a Buy rating on GMED, with a target price of $61, implying a potential upside of 15%.
These are just four of the 14 underappreciated investment opportunities highlighted by Stifel Research. Other recommendations include Ingersoll Rand, KBR, Leidos Holdings, Maximus Inc., Philip Morris International, Six Flags, Sitio Royalties Corp., gene editing stocks, and engineering services firms. Investors looking for potential upside in 2024 may find value in exploring these under-the-radar stocks and industries.
Analyst comment
Positive news. Analyst predicts that the market will experience growth in 2024 due to the underappreciated investment opportunities highlighted by Stifel Research. These opportunities range from biotech to renewable fuels to spine companies, indicating a diverse range of potential profit for investors.
