3 Stocks Not on Wall Street's Radar

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Whether it's a tiny upstart or an established stalwart, sometimes companies are either ignored by Wall Street or fall out of favor with its analysts. For investors following them closely, though, that provides an opportunity to swoop in before attention turns to them once more.” data-reactid=”11″>Whether it’s a tiny upstart or an established stalwart, sometimes companies are either ignored by Wall Street or fall out of favor with its analysts. For investors following them closely, though, that provides an opportunity to swoop in before attention turns to them once more.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="iRobot (NASDAQ: IRBT), Nordstrom (NYSE: JWN), and American Outdoor Brands (NASDAQ: AOBC) are three stocks currently flying under Wall Street’s radar. Let’s see what our Foolish contributors say about why you might want to dive in here.” data-reactid=”12″>iRobot (NASDAQ: IRBT), Nordstrom (NYSE: JWN), and American Outdoor Brands (NASDAQ: AOBC) are three stocks currently flying under Wall Street’s radar. Let’s see what our Foolish contributors say about why you might want to dive in here.

More

Image source: Getty Images.

A great long-term play

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="John Bromels&nbsp;(iRobot):&nbsp;Wall Street has given the cold shoulder to Roomba robotic vacuum maker iRobot lately, and the company’s shares have suffered, dropping 19.5% so far this year. However, I’m still bullish on the robot specialist’s prospects in the long term, and I think Wall Street’s indifference could mark an excellent time to scoop up some shares.” data-reactid=”26″>John Bromels (iRobot): Wall Street has given the cold shoulder to Roomba robotic vacuum maker iRobot lately, and the company’s shares have suffered, dropping 19.5% so far this year. However, I’m still bullish on the robot specialist’s prospects in the long term, and I think Wall Street’s indifference could mark an excellent time to scoop up some shares.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The big reason for iRobot's poor performance in 2019 boils down to one word: tariffs. Although iRobot is growing revenue at a healthy clip and successfully managing costs, CEO Colin Angle cut the company's guidance anyway. On the Q2 earnings call, he explained why: "[W]e believe that the direct and indirect impacts of the ongoing U.S.-China trade war and the recently implemented 25% tariffs are likely to constrain U.S. market segment growth in the second half of the year."” data-reactid=”27″>The big reason for iRobot’s poor performance in 2019 boils down to one word: tariffs. Although iRobot is growing revenue at a healthy clip and successfully managing costs, CEO Colin Angle cut the company’s guidance anyway. On the Q2 earnings call, he explained why: “[W]e believe that the direct and indirect impacts of the ongoing U.S.-China trade war and the recently implemented 25% tariffs are likely to constrain U.S. market segment growth in the second half of the year.”

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The thing is, even the downward revision of the company's 2019 guidance still calls for double-digit year-over-year revenue growth. True, it'll be in the 10% to 14% range instead of the 17% to 20% range, but that's still not bad. And given the massive size of the potential market for iRobot’s robotic vacuums, mops, and lawn mowers, future growth seems likely.&nbsp;” data-reactid=”28″>The thing is, even the downward revision of the company’s 2019 guidance still calls for double-digit year-over-year revenue growth. True, it’ll be in the 10% to 14% range instead of the 17% to 20% range, but that’s still not bad. And given the massive size of the potential market for iRobot’s robotic vacuums, mops, and lawn mowers, future growth seems likely. 

As long as the tariffs continue to drag on, iRobot’s growth may be stunted, but investors should look further out at the company’s excellent long-term prospects.

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="An out-of-fashion retailer” data-reactid=”30″>An out-of-fashion retailer

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Jeremy Bowman (Nordstrom):&nbsp;It’s tough out there for department stores these days. Sears has gone bankrupt,&nbsp;J.C. Penney looks to be on the brink,&nbsp;Macy’s&nbsp;just slashed its profit forecast for the year, and&nbsp;Kohl’s&nbsp;has sold its soul to Amazon.com.” data-reactid=”31″>Jeremy Bowman (Nordstrom): It’s tough out there for department stores these days. Sears has gone bankrupt, J.C. Penney looks to be on the brink, Macy’s just slashed its profit forecast for the year, and Kohl’s has sold its soul to Amazon.com.

Nordstrom, on the other hand, appears to be getting punished for the struggles of its peers, even though in reality the company is in much better shape than the rest of its sector.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="In addition, to its department-store business, Nordstrom has a successful off-price chain, Nordstrom Rack, that competes more closely with TJX‘s T.J. Maxx than with other department stores, and a thriving online business that makes up close to a third of its sales. &nbsp;Meanwhile, the company is also experimenting with projects such as&nbsp;Nordstrom Local and Trunk Club, the curated styling service that grew out of a 2014 acquisition. And the retailer still has ambitious expansion projects in New York, where it will soon open its flagship women’s store, and in Canada, where it recently opened up six full-line stores and is filling in that market with Rack locations.” data-reactid=”33″>In addition, to its department-store business, Nordstrom has a successful off-price chain, Nordstrom Rack, that competes more closely with TJX‘s T.J. Maxx than with other department stores, and a thriving online business that makes up close to a third of its sales.  Meanwhile, the company is also experimenting with projects such as Nordstrom Local and Trunk Club, the curated styling service that grew out of a 2014 acquisition. And the retailer still has ambitious expansion projects in New York, where it will soon open its flagship women’s store, and in Canada, where it recently opened up six full-line stores and is filling in that market with Rack locations.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Despite those potential growth drivers, the stock has tumbled, down 56% over the past year. Today, the stock offers a dividend yield of 5.9% and has a&nbsp;P/E ratio of less than 8 based on this year’s guidance. In addition, the founding Nordstrom family is making rumblings about an acquisition or at least buying up the discounted stock. The latter move would surely lift shares.” data-reactid=”34″>Despite those potential growth drivers, the stock has tumbled, down 56% over the past year. Today, the stock offers a dividend yield of 5.9% and has a P/E ratio of less than 8 based on this year’s guidance. In addition, the founding Nordstrom family is making rumblings about an acquisition or at least buying up the discounted stock. The latter move would surely lift shares.

Read More