Many institutional investors shy away from buying even the highest-quality little-known stocks. That’s because these investors tend to be cautious in general and focused on recent financial results, rather than finding companies that will be very successful in a year or two. Additionally, from a psychological and incentivization perspective, most fund managers have already become successful because they have very high-paying jobs that they don’t want to lose or even jeopardize. Historically, very few people have gotten fired for “following the crowd.”
But fund managers’ herd mentality enables retail investors to easily find little-known stocks to buy before they soar. And if they manage to find such stocks and hold onto them for a long time, they can make a great deal of money. After all, it wasn’t so long ago that Amazon (NASDAQ:AMZN), Netflix (NASDAQ:NFLX), and ServiceNow (NASDAQ:NOW) were on lists of top little-known stocks.
With that said, here are three of the top little-known stocks to buy. I found these names on stock lists provided by Investor’s Business Daily.
| CELH | Celsius Holdings | $126.44 |
| RMBS | Rambus | $66.52 |
| SMCI | Super Micro Computers | $219.18 |
Celsius Holdings (CELH)
Energy-drink maker Celsius (NASDAQ:CELH) is much less well-known than its top competitor, Monster Beverage (NASDAQ:MNST).
However, Celsius reported extremely strong first-quarter results. The company’s top line surpassed its previous “quarterly record” by $72 million, its North American sales soared 101% year-over-year, and it generated EBITDA, excluding some items, of $49 million. Americans are clearly starting to love the company’s energy drinks, making Celsius one of the best little-known stocks to buy.
Last August, Celsius unveiled “a long-term strategic distribution arrangement” with Pepsi (NASDAQ:PEP), and the company stated in conjunction with its Q1 results earlier this month that it would focus more intently on its international business. Both of these catalysts should meaningfully lift CELH stock going forward.
Investor’s Business Daily gives CELH a Composite Rating of 93 out of 99.
Rambus (RMBS)
Rambus (NASDAQ:RMBS) is a chip maker that develops “high-speed memory interfaces, security, cryptography, and semiconductor intellectual property.” Among its customers are automakers, data centers, and mobile phone makers.
According to Seeking Alpha columnist Growth Arcane, “Memory interface chips are like bridges that connect the brain of a computer or electronic device (the CPU) to its memory.”
As a result, I believe that the company’s shares should get a lift from AI, since AI is likely to greatly increase the number of computing devices and their memory intensity. Moreover, RMBS should get a boost over the long-term from the rapidly-increasing number of chips being used by data centers.
Additionally, the company partners with a number of huge companies, including Apple (NASDAQ:AAPL), Advanced Micro Devices (NASDAQ:AMD), and Broadcom (NASDAQ:AVGO), further validating its technology.
Investor’s Business Daily gives RMBS its maximum Composite Rating of 99.
Super Micro Computers (SMCI)
As I pointed out in a January column, Super Micro Solutions (NASDAQ:SMCI) develops “servers and storage products and “offers exceptionally low-cost, low-power solutions that are ‘personalized’ to the needs of its customers and extensively utilize artificial intelligence, edge computing, and 5G technologies.”
Data centers are one of the firm’s key end markets. As a result, not only does SMCI use AI, but it will benefit from the proliferation of AI. That’s because, in order to support the technology, data centers will need many more of SMCI’s server and storage offerings.
On May 3, the company predicted that its fiscal Q4 sales would come in between $1.7 and $1.8 billion, well above analysts’ average estimate of $1.64 billion. Moreover, the firm predicted that its Q4 earnings per share would be $2.21-$2.71, much higher than the mean estimate of $1.76.
Investment bank Northland responded to the news by hiking its price target on SMCI to $200 from $175. In-line with my thesis, the firm wrote that “that it is ‘increasingly apparent’ that Super Micro is aligned with the AI mega-trend,” The Fly reported at the time. Impressively, the demand for SMCI’s products triggered by AI adoption jumped 60% this quarter versus the previous quarter, the bank estimated.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.