In this article, we discuss the 10 low profile stocks that surprised in 2021.
The beginning of 2021 was marked by the economic recovery but inflation fears gradually dampened the initial momentum and served to disrupt the hopes of a faster-than-expected “back to normal” for the stock market. The three main market indices still registered impressive gains in 2021, with the S&P 500 up close to 27%, the NASDAQ up 21%, and the DOW Jones Industrial Average up almost 19%. However, a record 6.8% high was registered on the Consumer Price Index in December, shattering an inflation record held since 1982. The Fed refused to intervene, maintaining interest rates and pumping billions into the economy.
Five Firms Dominate S&P 500 Returns
There were plenty of noteworthy trends that served to define the market in 2021. The short squeeze saga involving retail investors and hedge funds led to a historic standoff in January, a battle for domination that continued for the rest of the year. An IPO boom, led by special purpose acquisition firms, raked in a record $453 billion in proceeds. The tech industry continued to dominate, as evidenced by Goldman Sachs research which showed that between April and December, over 51% of the total returns of the S&P 500 came from five big tech firms.
These five firms were Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL), Tesla, Inc. (NASDAQ:TSLA), and NVIDIA Corporation (NASDAQ:NVDA). Even as these companies grabbed the headlines, there were some low profile stocks that managed equally spectacular gains in 2021. Some of the top low profile stocks that surprised analysts in 2021 include The Sherwin-Williams Company (NYSE:SHW), Macy’s, Inc. (NYSE:M), and Ford Motor Company (NYSE:F), among others discussed in detail below.
Photo by Mohamed Hadji on Unsplash
Our Methodology
The companies that have not received widespread attention in investor circles despite solid performance in 2021 were selected for the list. The business fundamentals and analyst ratings for these firms are also discussed to provide readers with some context for their investment choices.
Data from around 900 elite hedge funds tracked by Insider Monkey was used to identify the number of hedge funds that hold stakes in each firm.
Low Profile Stocks that Surprised in 2021
10. WaveDancer, Inc. (NASDAQ:WAVD)
Number of Hedge Fund Holders: N/A
Gain in Share Price in 2021: 250%
WaveDancer, Inc. (NASDAQ:WAVD) provides software and information technology solutions. The company was formerly known as Information Analysis but changed the name to WaveDancer in December 2021. The name change came merely a few days after the firm was approved for listing on the NASDAQ. Previously, the shares had traded in Over-the-Counter (OTC) markets. It rose to prominence after acquiring Gray Matters, a blockchain and encryption firm, for $10.5 million in November. Gray Matters works closely with the US government.
The purchase helps WaveDancer, Inc. (NASDAQ:WAVD) with a profile in innovative supply chain management. It will also aid WaveDancer in deepening existing relationships with the US intelligence, diplomatic, and national security sectors.
Just like Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL) and Tesla, Inc. (NASDAQ:TSLA), WaveDancer, Inc. (NASDAQ:WAVD) is one of the stocks attracting the attention of smart investors.
9. Ingles Markets, Incorporated (NASDAQ:IMKTA)
Number of Hedge Fund Holders: 14
Gain in Share Price in 2021: 104%
Ingles Markets, Incorporated (NASDAQ:IMKTA) owns and runs supermarkets in the southern parts of the United States. Even though the company has not grown its physical footprint by a meaningful degree in recent years, it has still managed to grow revenues during the period. It is also one of the cheaper options in the retail space, one of the sectors expected to benefit from the market shift towards value in the coming weeks. One unique aspect of Ingles Markets, Incorporated (NASDAQ:IMKTA) is that over 30% of the sales come from grocery products.
Between 2017 and 2021, the revenue of Ingles Markets, Incorporated (NASDAQ:IMKTA) grew by more than 26% from $4 billion to $5 billion, equating to an average annual growth rate of around 5.7%. Major hedge funds are also bullish on the stock. Among the hedge funds being tracked by Insider Monkey, New York-based investment firm GAMCO Investors is a leading shareholder in Ingles Markets, Incorporated (NASDAQ:IMKTA) with 787,800 shares worth more than $52 million.
8. Clearfield, Inc. (NASDAQ:CLFD)
Number of Hedge Fund Holders: 14
Gain in Share Price in 2021: 250%
Clearfield, Inc. (NASDAQ:CLFD) makes and sells communications equipment. The stock has returned more than 38% to investors in the past twelve months. One of the primary reasons for this boom is the successful passage of the Biden Infrastructure Plan. The plan set aside $65 billion for the development of communications infrastructure. Fiber optics, a key part of edge computing, 5G, and Internet-of-Things, and one of the premier products of Clearfield, Inc. (NASDAQ:CLFD), have seen a massive surge in demand as a result.
Hedge funds remain bullish on Clearfield, Inc. (NASDAQ:CLFD) as a new fiscal year begins. At the end of the third quarter of 2021, 14 hedge funds in the database of Insider Monkey held stakes worth $80 million in Clearfield, Inc. (NASDAQ:CLFD), the same as in the preceding quarter worth $56 million.
7. Synaptics Incorporated (NASDAQ:SYNA)
Number of Hedge Fund Holders: 23
Gain in Share Price in 2021: 197%
Synaptics Incorporated (NASDAQ:SYNA) operates as a semiconductor manufacturer. The stock is cheap and offers unique value to investors who want an entry point into the chip industry, the unique proposition being the large footprint of Synaptics Incorporated (NASDAQ:SYNA) in the Internet-of-Things market. In the first quarter results for the present fiscal year, 55% of the revenue for Synaptics Incorporated (NASDAQ:SYNA) came from IoT products, with mobile and personal computer markets making up the rest.
Leading mobile brands like OPPO and OnePlus also use Synaptics Incorporated (NASDAQ:SYNA) products. This is why hedge funds also trust Synaptics Incorporated (NASDAQ:SYNA). At the end of the third quarter of 2021, 23 hedge funds in the database of Insider Monkey held stakes worth $493 million in Synaptics Incorporated (NASDAQ:SYNA).
In its Q3 2021 investor letter, FPA Queens Road, an asset management firm, highlighted a few stocks and Synaptics Incorporated (NASDAQ:SYNA) was one of them. Here is what the fund said:
“Synaptics, a developer of human interface (HMI) hardware and software, is experiencing a strategic shift to a higher-margin business, primarily Internet of Things (IoT) products, and continued its recent trend of announcing higher operating margins and providing favorable financial guidance. During the quarter, the company announced it was purchasing former portfolio holding, DSP Group, a communications chip designer.Management is executing well on this strategic shift and delivering impressive financial results.”
6. SiTime Corporation (NASDAQ:SITM)
Number of Hedge Fund Holders: 21
Gain in Share Price in 2021: 165%
SiTime Corporation (NASDAQ:SITM) provides silicon timing systems. These systems are used in various industries, including IoT, automotive, electronics, and others. According to an estimation by the firm in 2020, the firm needed 40 billion units to meet a demand of around 2 timing chips per device. By 2035, this number is expected to climb to almost 125 billion units. This puts SiTime Corporation (NASDAQ:SITM) on a path to deliver sales growth of around 25% in the coming ten years. The past earnings of the firm suggest it can deliver those numbers.
SiTime Corporation (NASDAQ:SITM) has attracted the attention of major hedge funds that are adept at picking out quality offerings in most sectors. Among the hedge funds being tracked by Insider Monkey, Illinois-based investment firm Trigran Investments is a leading shareholder in SiTime Corporation (NASDAQ:SITM) with 393,972 shares worth more than $80 million.
Alongside Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG), Apple Inc. (NASDAQ:AAPL), and Tesla, Inc. (NASDAQ:TSLA), SiTime Corporation (NASDAQ:SITM) is one of the stocks on the radar of shrewd investors.
In its Q3 2020 investor letter, Wasatch Advisors, an asset management firm, highlighted a few stocks and SiTime Corporation (NASDAQ:SITM) was one of them. Here is what the fund said:
“SiTime Corp. (SITM), a developer of silicon based timing components, was the top contributor to Fund performance during the third quarter as the company made a special announcement to raise its earnings guidance. SiTime Corporation (NASDAQ:SITM) manufactures oscillators, clock generators and embedded resonators used for ethernet switches, computing devices, graphics cards, disk drives, mobile phones and subscriber-identity cards. With time-keeping devices transitioning from quartz to silicon, which improves accuracy, we think the company is particularly well-positioned as a technology leader that’s years ahead of the competition. As we’ve communicated before, SiTime is an almost ideal example of a holding we like for the Fund. The company ranks exceedingly well in our assessment of its balance sheet, business model, management team, market share and growth potential. Moreover, we want to own SiTime in good environments and in bad ones too.”
5. Metropolitan Bank Holding Corp. (NYSE:MCB)
Number of Hedge Fund Holders: 23
Gain in Share Price in 2021: 196%
Metropolitan Bank Holding Corp. (NYSE:MCB) is a bank holding company based in New York. There is muted interest in the stock on mainstream financial news media despite the fact that the shares have jumped 177% in the past twelve months. The strong performance is driven by solid fundamentals and a healthy growth outlook. In the past two years, Metropolitan Bank Holding Corp. (NYSE:MCB) has consistently beaten market estimates on earnings and future prospects look bright amid growth of private business capitalization in the NY area.
There are some hedge funds that remain bullish on Metropolitan Bank Holding Corp. (NYSE:MCB) for 2022 as interest rates rise and equate to a direct increase in earnings. Among the hedge funds being tracked by Insider Monkey, Virginia-based firm EJF Capital is a leading shareholder in Metropolitan Bank Holding Corp. (NYSE:MCB) with 537,542 shares worth more than $45 million.
4. The AZEK Company Inc. (NYSE:AZEK)
Number of Hedge Fund Holders: 38
Gain in Share Price in 2021: 22%
The AZEK Company Inc. (NYSE:AZEK) makes and sells building products. On December 15, JPMorgan analyst Michael Rehaut upgraded The AZEK Company Inc. (NYSE:AZEK) stock to Overweight from Neutral and raised the price target to $56 from $54, noting that the share price of the firm did not reflect the long-term prospects of the stock. The analyst forecast that The AZEK Company Inc. (NYSE:AZEK) would deliver residential sales growth of 20% in 2022 and 12% in 2023, driven by factors such as material conversion and capacity expansion for growth.
The hedge fund sentiment around The AZEK Company Inc. (NYSE:AZEK) has been positive over the past few months as well. At the end of the third quarter of 2021, 38 hedge funds in the database of Insider Monkey held stakes worth $427 million in The AZEK Company Inc. (NYSE:AZEK), compared to 37 the preceding quarter worth $407 million.
In its Q2 2021 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and The AZEK Company Inc. (NYSE:AZEK) was one of them. Here is what the fund said:
“The AZEK Company Inc.: AZEK is a leading manufacturer of outdoor, non-wood building products including decking, railing, trim, and other leading outdoor products. 95% of cash flow is generated from the U.S. residential housing market. We believe the company has a compelling multi-year strategic growth plan that should result in strong share price appreciation in the next few years.”
3. Macy’s, Inc. (NYSE:M)
Number of Hedge Fund Holders: 41
Gain in Share Price in 2021: 133%
Macy’s, Inc. (NYSE:M) owns and runs department stores. The company has beaten market estimates on earnings for the past six quarters and the shares have more than doubled in value over the past twelve months. However, Macy’s, Inc. (NYSE:M) remains one of the top value plays in the market as margins and free cash flows improve. Most of this growth is driven by online sales which is attracting new customers. In the third quarter of 2021, the firm attracted 4.4 million new customers to the brand.
Elite hedge funds have taken note of the performance and doubled down on their bullish bets on Macy’s, Inc. (NYSE:M). Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in Macy’s, Inc. (NYSE:M) with 10.5 million shares worth more than $238 million.
In its Q3 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Macy’s, Inc. (NYSE:M) was one of them. Here is what the fund said:
“Meanwhile, Macy’s, an omnichannel retail organization that operates stores, websites, and mobile applications under the Macy’s, Bloomingdale’s, and Bluemercury brands, also had a strong quarter (+21.5%). Macy’s delivered strong second-quarter earnings, beating on earnings and revenue and raising guidance as the retailer continues to pay down debt and grow its digital business.”
2. The Sherwin-Williams Company (NYSE:SHW)
Number of Hedge Fund Holders: 44
Gain in Share Price in 2021: 46%
The Sherwin-Williams Company (NYSE:SHW) markets specialty chemicals. Over the last decade, the company has managed to more than double annual revenues. The Sherwin-Williams Company (NYSE:SHW) has improved earnings by smart acquisitions, 14 in total over the past ten years, as well as organic growth. During this period, the margins for The Sherwin-Williams Company (NYSE:SHW) have also improved by almost 80%. In the coming years, the company expects sales to grow at around 8%.
The Sherwin-Williams Company (NYSE:SHW) has attracted the attention of hedge funds with its stellar performance. Among the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm Chilton Investment Company is a leading shareholder in The Sherwin-Williams Company (NYSE:SHW) with 1.1 million shares worth more than $323 million.
1. Ford Motor Company (NYSE:F)
Number of Hedge Fund Holders: 51
Gain in Share Price in 2021: 143%
Although Ford Motor Company (NYSE:F) is a recognizable brand name, the stock has slipped under the radar with regards to the potential it offers in the EV market, considering the astronomical valuations of other EV firms with no legacy businesses. The company recently laid out a plan to double the production capacity for the Ford F150 Lightning, the all new electric pickup that surged in demand in the US and China since it was released last year. The truck had 200,000 pre-orders before it was even launched. Ford Motor Company (NYSE:F) also plans to increase EV battery capacity this year.
There are many hedge funds that hold bullish views on Ford Motor Company (NYSE:F). At the end of the third quarter of 2021, 51 hedge funds in the database of Insider Monkey held stakes worth $1.6 billion in Ford Motor Company (NYSE:F).
In its Q1 2020 investor letter, Greenlight Capital Fund, an asset management firm, highlighted a few stocks and Ford Motor Company (NYSE:F) was one of them. Here is what the fund said:
“General Motors (GM) was a disappointment. The damage from last year’s strike consumed most of the cash flow GM would have otherwise generated in 2019. We had expected a strong bounce back in earnings and cash flow in 2020, but the annual guidance, while meeting Wall Street expectations, was worse than we expected. Further, the cash burned during the strike needed to be re-earned in order to protect GM’s investment grade rating. Pre-crisis, there would have been, at best, a minimal share repurchase late in the year. At the analyst day, our hopes that 2020 would finally be the year were dashed. We sold our stock. Over our five-year holding period, we made a 9.6% IRR on GM. In the difficult environment, its most comparable peer, Ford, lost about half its value.”
You can also take a peek at 10 Stocks That Benefit from Global Chip Shortage and 10 Fintech Stocks Redditors are Buying.
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Disclosure. None. 10 Low Profile Stocks that Surprised in 2021 is originally published on Insider Monkey.
