Generally speaking, the equities sector represents the collective valuation of all publicly available information about exchange-listed companies, making the notion of long-term sleeper stocks to buy a rather risky concept. Nevertheless, individual investors can’t be all places at all times. Occasionally, a few compelling ideas slip through the cracks, presenting upside opportunities for intrepid investors.
Before we get started, readers should realize that the below long-term sleeper stocks to buy align with the higher-risk, higher-reward spectrum of market ideas. Fundamentally, they require a belief in a thesis that may not have materialized, but very well could over time. Therefore, the reward potential is quite high for these long-term bets.
On the other hand, no guarantees exist that the presented theses will pan out as advertised. Therefore, investors should approach these long-term sleeper stocks to buy with a healthy dose of cautious optimism.
| KSCP | Knightscope | $2.53 |
| SUNL | Sunlight Financial | $2.56 |
| OPI | Office Properties Income | $14.09 |
| VALE | Vale | $12.54 |
| SBSW | Sibanye Stillwater | $8.37 |
| AMP | Ameriprise Financial | $250.97 |
| AQN | Algonquin Power & Utilities | $11.69 |
Knightscope (KSCP)
A security camera and robotics firm, Knightscope (NASDAQ:KSCP) specializes in autonomous security robots or ASRs. Effectively functioning as patrol mechanisms, these robots can help keep the peace while relaying problematic incidents to law enforcement agencies. Better yet, ASRs can perform these tasks without the involvement of human intermediaries.
According to the company’s website, Knightscope’s security robots have already logged over one million hours of service with paying clients. Typically, these partners include parking complexes, shopping malls, hospitals and corporate complexes.
Fundamentally, the beauty of the Knightscope business model is the reduction of human-to-human safety interactions, which can create ugly tensions. Rather, these non-human ASRs can potentially deescalate dangerous situations. If the initial interactions fail to bring about desired outcomes, then law enforcement can step in.
Nevertheless, Wall Street doesn’t appear to recognize the long-term potential for Knightscope, making KSCP one of the long-term sleeper stocks to buy.
Sunlight Financial (SUNL)
On the surface, Sunlight Financial (NYSE:SUNL) presents a framework that should be relevant and desirable because of contemporary ideologies. Partnering with contractors nationwide, Sunlight Financial helps them offer homeowners “innovative, affordable loans for modern home upgrades.” Specifically, Sunlight empowers people to acquire residential solar systems.
Still, given the pressures of the moment, Wall Street takes a dim view of SUNL stock. Indeed, shares slipped more than 44% on a year-to-date basis through the Sept. 26 session. And while revenue increased on a year-over-year basis in the company’s second quarter of 2022, Sunlight’s net income for the company’s most recent earnings report came out to $4.1 million. This figure slipped 21% against the year-ago period.
Nevertheless, because of factors such as climate change and historically high rates of inflation, many homeowners will likely transition to solar energy solutions. Over time, that’s going to help Sunlight, making SUNL one of the long-term sleeper stocks to buy I’m watching closely.
Office Properties Income (OPI)
While some market ideas for long-term sleeper stocks to buy seems obvious, others – such as Office Properties Income (NASDAQ:OPI) – present an understandable reason why they fail to attract the Street. Office Properties is a real estate investment trust (or REIT) that focuses on “owning, operating and leasing buildings primarily leased to single tenants and those with high credit quality characteristics like government entities.”
Of course, the massive work-from-home pivot stemming from the coronavirus pandemic essentially squashed office culture. Accordingly, OPI stock has lost nearly 44% year-to-date. Moreover, the nearer-term negative momentum presents many anxieties. On Sept. 26, OPI dropped 8% in a single day. Over the trailing month, shares fell 20%. These performance statistics indicate that the Street believes work from home is here to stay.
But it might not be. Not only are upper management teams statistically winning the war in getting their employees back into the office, they also enjoy ultimate leverage. After all, they sign the checks, meaning the employees don’t hire themselves. With that, the normal work culture may return, which could bode well for OPI stock.
Vale (VALE)
Due to Russia’s invasion of Ukraine, the critical resources sector became hostage to dangerous military ambitions. One cynical benefit is that companies providing said resources typically perform well in such times. After all, turmoil in supply chains raise commodity prices, which improve profitability for miners who can export their goods efficiently.
Accordingly, Vale (NYSE:VALE) represents one of the long-term sleeper stocks I’m watching closely. Since the start of this year, VALE has dropped 9% at the time of writing. That said, I think the tides may be about to turn for this Brazilian metals and mining firm.
That’s mainly because Vale represents the world’s largest producer of iron ore and nickel. The latter metal offers substantial relevance as it’s a key ingredient of lithium-ion batteries that are especially important for the production of vehicles. EVs present a potential solution for the present energy crisis. Over time, the electrification of mobility can help countries wean off hydrocarbons.
Granted, this dynamic will take some time to play out. However, the motif here is long-term sleeper stocks to buy. Interestingly enough, Gurufocus.com labels Vale as modestly undervalued. Currently, the company features a forward price-earnings ratio of 4.1-times, well below the industry median of 8.8-times.
Sibanye Stillwater (SBSW)
Because of the seesaw effect of this year’s economic turbulence, resource firms like Sibanye Stillwater (NYSE:SBSW) suffered incredible volatility. Since the beginning of January, SBSW shares fell almost 35%. Over the trailing month, they’re down over 14%. Clearly, the Street doesn’t think much of Sibanye. Nevertheless, it’s arguably one of the long-term sleeper stocks to buy.
Prior to the Covid-19 crisis, Sibanye garnered much attention for its gold production. Moving forward, though, the company might attract investors for its platinum group metals, specifically palladium. Currently, Russia represents the leading palladium exporter. However, South Africa – Sibanye’s home market – is a palladium powerhouse in its own right. Therefore, South Africa’s generally friendly posture to the west may be critical for SBSW.
For now, most equity investors ignore SBSW. However, it’s important to realize that per TipRanks, Sibanye commands a consensus strong buy rating. Out of five covering analysts, four rate it a buy while one gives it a sell rating.
Ameriprise Financial (AMP)
A finance-related enterprise, Ameriprise Financial (NYSE:AMP) provides financial planning products and services, including wealth management, asset management, insurance, annuities, and estate planning. Under the current paradigm, fears of an economic slowdown – even a recession – has many folks on edge. Thus, it’s understandable why the Street tends to ignore AMP stock. Shares of this company are down nearly 17% year-to-date.
On the other hand, Ameriprise could very well be one of the long-term sleeper stocks to buy. The bullish thesis comes down to an expected monetary framework pivot. Under an inflationary cycle, the subsequent erosion of dollar purchasing power means that investors have two options with their money: spend it or invest it. Otherwise, keeping dollars dormant is likely to produce wealth erosion over time.
In a deflationary cycle, purchasing power rises – as has happened recently. Therefore, an incentive exists to do nothing but stay in cash. That’s an extraordinarily difficult circumstance to navigate, meaning that Ameriprise’s expertise should attract retail investors, who are likely to stumble trading on their own in a deflationary environment.
Algonquin Power & Utilities (AQN)
If you consider some of the stronger players during this post-pandemic new normal, you’ll notice that utility firms tend to perform well. Essentially, this sector enjoys a permanent baseline demand profile. Yes, economic circumstances will always impact consumption behaviors and patterns. However, in a modern economy, households won’t be able to survive long without critical services. (The lights and heat generally need to stay on, regardless of the economy).
Thus, this environment is one that favors a company like Algonquin Power & Utilities (NYSE:AQN). This Canadian renewable energy and regulated utility conglomerate provides natural gas, water and electricity generation, transmission and distribution utility services. That said, AQN stock is down 17% year-to-date, as the company’s underlying performance has lagged. While broader economic pressures present a challenging environment for Algonquin, it’s one of the long-term sleeper stocks to buy, in my view.
Admittedly, the company’s net loss of $33 million in Q2 2022 – down conspicuously from net income of $103 million in the year-ago quarter – presents a major distraction. That said, over the long-term, folks can’t ignore their utility bills. Thus, I think Algonquin’s forward-looking prospects remain bright.
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On the date of publication, Josh Enomoto 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.