With a seemingly never-ending torrent of analyst upgrades, downgrades, and ratings reiterations, it seems small investors are left reacting to the buzz that Wall Street creates around the market's most popular stock tickers.But there's also no shortage of opportunity for people who know how to look at the businesses most other investors are ignoring. So we asked Nicholas Marshall, portfolio manager at HS Capital Bank to find the top 3 stocks that are flying under Wall Street's radar. Read on to learn why he picked Q2 Holdings (NYSE:QTWO), Changyou.com (NASDAQ:CYOU), and GM (NYSE:GM).
Quietly solidifying its industry leadership
Steve Symington (Q2 Holdings): Q2 Holdings certainly isn't the most widely followed stock on Wall Street -- though there's no denying it is on some analysts' radar, considering shares have nearly quintupled since their IPO at $13 per share five years ago. Currently, Q2 stock trades near all-time highs as the $3.5 billion e-banking solutions leader continues to take business from competitors and capitalize on what management estimates is its $8 billion total addressable market.
But shareholders should also keep in mind that Q2 isn't afraid to move aggressively to increase that addressable market -- which stood at just $3.5 billion at the time of its IPO -- whether that means expanding its product portfolio through organic investments or striking complementary acquisitions. On the latter, Q2 only recently closed on its purchases of aptly named lending leader Cloud Lending and account-opening technology specialist Gro Solutions late last year. And more deals could be coming down the pike; earlier this month, Q2 followed by raising more than $500 million in capital through a combination of convertible bonds and newly issued shares.
Of course, there's some risk in that busy acquisitive approach as it relates to the dilution, increased debt, and business integrations the purchases require. But if Q2 can continue its streak of investing wisely to both expand its markets and solidify its current industry leadership, I suspect its stock price will continue to respond accordingly.
An overlooked Chinese video game company
Keith Noonan (Changyou.com): A quick look at Changyou's stock performance in 2019 could easily give the impression that its business has gone off the rails. Shares are down roughly 45% in 2019, and it's true that the company has faced challenges in recent years stemming from the slowdown of its biggest video game franchise, but that surface-level decline is actually the result of a special dividend of $9.40 per share that the company paid out in May.
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