If you think about it, many of today’s high-flying stocks were once ignored by the Street. Nvidia (NASDAQ:NVDA) was a struggling video-game chip maker, Amazon (NASDAQ:AMZN) was a fledgling online book seller and Apple (NASDAQ:AAPL) was a formerly successful PC maker, fighting to stay in business. Indeed, the Street tends to shun stocks with great potential that are not yet delivering huge revenue gains or impressive partnerships. Therefore, it’s certainly worthwhile for long-term investors to consider buying stocks that are largely being shunned by the most popular business-news pundits and the largest investors. Here are three such overlooked stocks to buy.
Eisai (ESAIY)
The Street is still not enthusiastic about Japanese drug maker Eisai (OTCMKTS:ESAIY), co-owner of the first-ever Alzheimer’s treatment, Leqembi, that has shown a significant amount of effectiveness.
According to data reported late last year, 60% of a small group of early-stage Alzheimer’s patients who received the drug meaningfully improved. Among a larger group of patients with varied stages of the disease, cognitive decline was slowed by 27%.
For a variety of logistics-related reasons, the uptake of the drug has been slower than expected. Neurologists have been unenthusiastic about the treatment. Insurers’ reluctance and IV-only delivery likely explains physicians’ reticence.
Thankfully, Eisai has begun seeking FDA approval for a subcutaneous version of Leqembi which should ease the drug’s administration. Additionally, Eisai’s U.S. partner, Biogen (NASDAQ:BIIB), is reportedly working to increase insurance coverage of the treatment.
In spite of the problems, Eisai predicts that the drug will generate almost $2 billion in sales by fiscal year 2027 and $8 billion in revenue in fiscal year 2031.
Entain (GMVHY)
Entain (OTCMKTS:GMVHY), a UK-based online betting giant, delivered strong financial results in 2023. It also may greatly benefit from selling a stake in a joint venture to MGM (NYSE:MGM) and could itself become a takeover target.
Last year, Entain’s revenue climbed 11% to 4.77 billion British pounds, while its operating profit, excluding certain items, jumped 18% to 641.8 million British pounds.
Meanwhile, Entain and MGM’s joint venture, BetMGM, rose 36% last year, and the joint venture generated positive EBITDA in the second half of the year. BetMGM’s revenue and EBITDA are likely to climb tremendously as the platform expands to more states and as the popularity of online betting spreads in the U.S.
There have been rumors that MGM would look to buy Entain’s stake in BetMGM. If that does occur, Entain would likely have several billion dollars of cash that it could return to shareholders or use to acquire a profitable firm.
Further, the London Times recently reported that private equity firms are interested in buying Entain. If that occurs, of course, the company’s shares would soar.
All of Entain’s positive catalysts make it one of the best overlooked stocks to buy.
Stem (STEM)
Stem’s (NYSE:STEM) AI-powered software maximizes the efficiency of electricity use. The electrification of transportation and the rapid proliferation of AI should cause Stem’s software demand to surge going forward.
Stem recently launched PowerBidder Pro to help energy traders and asset owners optimize their asset bids and manage risk. It also enables them, using AI, to predict their energy usage. The product appears to be geared to the owners of energy storage batteries, a sector that’s rapidly growing in America.
Encouragingly, Stem already obtained a major customer and leading independent energy and commodity group, Mercuria, for PowerBidder Pro. Mercuria’s decision to purchase the product so soon after its launch bodes well for its outlook.
Stem expects to generate $50 million of cash this year, making it a prime choice among overlooked stocks to buy.
On the date of publication, Larry Ramer held long positions in STEM, ESAIY and MGM. His wife held a long position in BIIB. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.