Finding the best-kept Wall Street secrets is tough because, well, if it were easy, they wouldn’t be secrets. Today’s top stocks tend to be large-cap tech names with rapid (and arguably unsustainable) growth that frustrates latecomer investors when that momentum slows.
That’s why, to find the best-kept Wall Street secrets, you need to satisfy two core criteria: identify emerging market opportunities and find small- or medium-cap stocks with great growth stats that target the new sector. These three stocks demonstrate that strong growth while their respective industries—B2B eCommerce, ready-to-drink alcohol, and work-from-home furniture—are just beginning a long and fruitful upward trajectory.
GigaCloud Technology (GCT)
We know that globalized, direct-to-purchaser eCommerce will only keep climbing in popularity – think Amazon (NASDAQ:AMZN) and Alibaba (NYSE:BABA). GigaCloud Technology (NASDAQ:GCT) is similar, but as one of the best-kept Wall Street secrets, the eCommerce company targets the massive B2B market to create a one-stop shop for businesses to source products and manage everything that entails.
Product and inventory management – not to mention sourcing and payment processing – are a tough nut to crack for medium-sized businesses. GigaCloud offers the full suite of scaled B2B eCommerce needs, including an active vendor marketplace, shipment and freight management, warehouse storage, AI-powered fulfillment, and, critically, facilitates cross-border payment safely and securely.
On its face, the company’s price-to-earnings ratio is surprisingly low, sitting at just 19x compared to the wider tech sector’s 36 times average ratio. The difference is even starker when you look at GigaCloud’s earnings growth. The company doubled its earnings per share over the past four quarters, with free cash flow per share staying strong—even as, critically, the company trades at just 0.68 times sales.
Vita Coco Company (COCO)
Beverage stocks like Monster (NASDAQ:MNST) and Celsius (NASDAQ:CELH) remain all the rage, but one competitor—Vita Coco Company (NASDAQ:COCO)—remains one of the best-kept Wall Street secrets. While the energy drink markets, and even standard sports drink segments, face steep competition, Vita Coco stands alone among coconut water vendors. The company owns more than half the total addressable market today.
Better yet, through a strategic partnership with British booze brand Diageo plc (NYSE:DEO), Vita Coco is making inroads toward the ready-to-drink alcoholic beverage market with a range of spiked coconut water options. While coconut water mixed with Captain Morgan isn’t my cup of tea, that emerging market is exploding and expected to grow at a 7.5% CAGR through 2029—and Vita Coco is set to snag a large portion of that market.
On the financial front, Vita Coco blew analysts away with an end-of-year 4% earnings beat, driven by a nearly 500% yearly net income increase alongside a 9.4% profit margin. We all know the story of how Monster became one of the century’s top-performing stocks—but this best-kept Wall Street secret may be on its way to doing the same.
Steelcase Inc (SCS)
Though work-from-home trends are weighing on some Wall Street sectors (like commercial real estate), high-end office furniture manufacturer and best-kept Wall Street secret Steelcase Inc (NYSE:SCS) is flourishing in this new environment. The company’s recent dividend increase affirms this success, offering investors 2.88% yield.
Steelcase quickly rebounded from the post-pandemic supply chain shocks and muted corporate furniture spending. Its latest quarterly earnings report revealed a net income of $30.8 million, a significant increase from the previous year’s figures. Meanwhile, the company has maintained steady sales, hovering around $800 million over the last five quarters, indicating that Steelcase has been enhancing its profit margins without compromising on quality.
The company is actively adjusting its strategy to fit the work-from-home era, aiming for a 5-7% annual increase in sales and targeting a 5% free cash flow margin relative to revenue over the next five years. Additionally, Steelcase has taken decisive steps to reduce its debt amid rising interest rates, bolstering its liquidity and minimizing interest expenses. This strategic financial management positions Steelcase as one of the best-kept Wall Street secrets today.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.