Filed Under: ,
Tickers in this Article: JW.A, ROL, BCA, JJSF, STU
A recent article suggested that 75% of small cap stocks have less than three analysts covering the companies and almost 50% have none. It seems crazy that so much money would flow to these companies despite a total lack of exposure but in many cases, that's exactly what happens. Wall Street follows the big boys exclusively and it's for this reason that small caps tend to do better long-term than their larger brethren. Investors have to do all the work. So, in the spirit of hard work, here are five stocks with little or no analyst coverage for readers to investigate further.

Biggest Stock Scams

1. John Wiley & Sons
According to Wiley's investor relations site it has two analysts covering its stock, one from JP Morgan and the other from Stifel Nicolaus. That's it. This family company is one of America's oldest and yet it receives almost no attention.
How's it done since? Its stock is down 31% in the past 52-weeks and its earnings and revenues were flat. I'd call it a victory given the circumstances.

2. Rollins
This is another one of those family businesses. Operating pest control brands such as Orkin, PCO Services and Western Pest, the Rollins family and CEO Gary Rollins own 52% of the stock. I just love large control positions like this. It tends to keep good managers in the game longer. Some might think expenses like pest control would go by the wayside in a recession, but think again. Who wants a roach-infested workplace? I sure don't.

Sales in the second quarter remained flat, which is better than a serious decline, while net income was up 12%. You have to admire businesses that perform services nobody wants to do. The demand never goes away.

3. CorpBanca S.A.
Venture all the way down to Chile and you'll find a little bank that's doing just fine. Its second-quarter earnings showed an increase in gross operating income year over year of 10.2% and a 59% increase in net income. Clearly, this is a bank in good standing unlike so many in America. In 2008, it paid a $1.96 dividend per ADS for a current yield of 6.4%. It's moving closer to its 5-year high so you might want to speed up the research.

4. J&J Snack Foods
This one is close to my heart and not just because they sell Slush Puppies. This stock was probably the steadiest I've ever laid my hands on. It dropped 40% in 2007, but has since gained all of it back while continuing to generate excellent revenue and earnings growth. For the nine months ended June 27, 2009, its revenues increased by 4% to $470.3 million while net income jumped 58% to $26.5 million. Their specialty is buying worn-out food and beverage brands and turning them around. (Learn some tips on how to exit a position to the best of your advantage, see To Sell Or Not To Sell.)

5. Student Loan Corp.
This last one is a bit of a flyer. STU is 80% owned by a subsidiary of Citigroup and manages a loan portfolio of $44 billion. There are three things that are exciting about this one. First, its stock is currently trading at one-third its value back in September of last year. Second, the late Bill Ruane's old firm owns 105,600 shares of the company. Third, even though it cut the dividend in April by 76%, it still pays a respectable $1.40 a share on an annual basis. I'm betting when good times come back, so too does a higher dividend. Even better, Citigroup buys out the remaining shareholders or sells it entirely. (Learn about the best of the best in The Greatest Investors.)

The Bottom Line
Almost 50% of public companies have no coverage by analysts. This leaves the field open for individual investors to find the diamond in the rough. Let the research begin!

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

comments powered by Disqus

Trading Center