As we head into the New Year, it is usually customary to look ahead and make all sorts of confident predictions about how the stock market will do, how the economy will fare, and exactly what investors should do.
I cannot imagine a greater waste of my time or yours.
Especially this year.
We have a new administration coming to Washington, and none of them has any idea how their proposals made on the election trail will play out.
The market is trading at very high valuations based on earnings, projected earnings charts, cash flow, asset values, and other metrics you might use.
Every barometer suggests that a lost decade of low return is an increasingly high probability.
Be that as it may, the stock market is in an uptrend and has been in an uptrend for over eighteen months now, with the exception of the final week of October 2023.
Despite the warnings from the various valuation barometers of rough water ahead, there is no cloud in the sky and zero indications that the near-constant buying pressure will soon abate.
Elevated geopolitical tensions and highly confident predictions mean the economy and financial markets will have even less value than usual.
Instead of joining the parade of fools making pointless predictions, I will spend the next four weeks bringing you growth, value, and income stocks that have the potential for outsized profits and are well under the radar.
This week, we will start December off with a bang and give you three growing companies that are not followed by many Wall Street analysts and are under-owned by institutions.
The jury is still out on Argentina’s future under President Javier Milei. The world is still far from convinced that Milei’s libertarian and confrontational approach to governing will result in a thriving economy.
They forgot to tell the folks at Banco BBVA Argentina SA (Ticker: BBAR). The bank’s results have been steadily improving, and the bank has been reporting solid results.
Earnings and revenues are growing by over 30% annually, and the handful of analysts paying any attention to Argentinian banks expect that to continue for at least five more years.
Returns, assets, and equity are moving steadily higher, and operating efficiency has also been improving.
The bank is the leading provider of digital banking products and services in Argentina.
It has also been working to deliver services to the underbanked population, offering products like prepaid debit cards that allow them convenient access to the banking system.
The company is starting to attract institutional buying interest but is still trading at a reasonable valuation.
Right now, the shares of BBVA Argentina are trading at about 10 times earnings.
The dividend is declared and paid twice a year based on current profits and has been growing steadily over the last few years.
Nobody is paying attention to Dynagas LNG Partners LP (Ticker: DLNG).
There are no analysts publishing rankings or recommendations, and the institutions does not own that much stock.
It does not help that the company is structured as an MLP will produce a K1 for tax purposes.
As the Instant Experts of the Internet have made clear repeatedly, K1s are never worth the hassle, no matter how much money you make.
Fortunately, we are not instant experts, and we should focus more on how much money could be made than on what tax form may be required to report our profits.
Dynagas owns 6 Liquified Natural Gas (LNG) carriers on long-term leases.
Currently, 100% of the fleet is committed through 2026.
As of this moment, the average lease has about 6 years remaining.
Five of the six ships are Ice Class and can trade in the frozen regions of the world, which will be of critical importance as the global LNG market continues to grow.
Back in 2019, the company eliminated the dividend to conserve capital.
Since then, Dynagas has improved its balance sheet, and business has steadily improved.
In the most recent quarter, the board decided that the business was now sufficiently strong and stable. They not only announced the reinstatement of the dividend but also decided to take advantage of the current value to buy back up to $10 million of stock over the next year.
That would be almost 6% of the company.
If the dividend holds at this level for the next three quarters, the yield will be about 4.2%.
Dynagas LNG is already seeing steady improvement in profits and cash flows.
Thanks to general neglect and disdain, the shares have languished and now trade at about half to tangible book value and less than five times free cash flow.
The tailwinds from fast-growing LNG demand should help push the stock much higher over the next few years.
Not many analysts follow Merchants Bancorp (Ticker: MBIN), but those love the fast-growing bank and expect the stock price to move a lot higher than the current quote.
Given that those price targets were produced before the tailwinds of the bank-friendly Trump administration became evident, it is clear that although the idea of a bank headquartered in the booming metropolis of Carmel, Indiana, may not be exciting, the profit potential could be stunning.
The bank is growing credit problems are minimal, and they have plenty of capital.
Revenues and earnings have grown by more than 30% over the past five years.
The bank has been successfully reinvesting profits, improving its net worth by about 30% annually.
The bank only has 6 branches, but its total assets are over $18 billion.
Merchants has a unique business model. It focuses on multifamily lending and provides mortgage warehouse credit lines to independent mortgage banks. As measured by returns on assets and equity, Merchants has consistently been one of the most profitable banks in the country.
In spite of this, the shares trade at less than 8 times earnings. Given the outlook of the banking industry in 2025, this could be one of the best growth stocks in your portfolio next year.
