There's Wall Street, and then there's the "Wallflowers." These are companies that go out of their way to avoid the Wall Street banking-and-research mill, content to let their businesses speak for themselves. Some companies end up as Wallflowers even if they prefer otherwise. They have been simply unable to get analysts to pay attention to them, perhaps because they don't have the financing needs that can generate big fees for Wall Street banks.
You can also blame it on shrinking research departments in many financial institutions. The big firms have sought to reduce the number of companies they follow sharply, while a number of smaller financial firms have gone out of business altogether.
To me, this just spells opportunity.
As these companies toil in anonymity, they are still seeking ways to build sales and profits. Their shares may not reflect these efforts right now, but for the patient investor, unrealized shareholder value gets unlocked, one way or another.
Here are three Wallflowers worthy of further research.
1. NL Industries (NYSE: NL)
With a market value of almost $600 million and a consistent 50-cent annual dividend (good for a 4.2% yield), you would think this maker of various metal products would have had at least some sort of following on Wall Street.
Well, this company's anonymity has been noted far away from Wall Street, in Texas to be exact. That's the home of mega-investor Harold Simmons, who has been quietly building an ever-larger position in this company. Since mid-May, he has acquired another 20,000 shares and now controls more than 42 million shares, or roughly 90% of the company's entire stock.
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for August 1st, 2014 | John Ransom
Today, at 11:20 AM PT: Get the Market Movements in Advance; Williams Edge Webinar for July 31st, 2014 | John Ransom