In today’s market, marked by a market correction and wide bearish sentiment, investors are flocking to low-risk, low(ish)-reward assets like treasuries. Fixed-income strategies like bond ladders offer more yield than they have in decades. At the same time, stocks are sliding and real estate is slumping. It’s no wonder investors are flying to safety and avoiding even a hint of risk.
But that might be a mistake. Some stocks, overlooked for one reason or another, represent solid fundamental strength and compelling upside. At the same time, while not necessarily value stocks, they’re more than stable with a proven track record of success and great long-term prospects.
Nintendo (NTDOY, NTDOF)
Nintendo (OTCMKTS:NTDOY, OTCMKTS:NTDOF) might seem a counterintuitive stock pick. After all, Nintendo stock is one of the oldest on the market – the company was founded in the late 1800s. It might be difficult to imagine much more upside for the gaming stock – let alone see it triple by 2030. On the other hand, the company’s longevity cements it firmly in the low-risk camp.
But recent news, rumor, and innuendo indicate big things ahead for Nintendo. First, the most reliable predictor of short-term success for this company among the low-risk, high-reward stocks lies in its intellectual property portfolio. One of those properties, Super Mario Bros., generated $1.363 billion in box office sales this year. While a one-off winner like the Super Mario Bros. Movie might not send Nintendo soaring, it underlines an important point. Nintendo has a massive bench of intellectual property that’s mostly untapped by moviemakers. As studios see superhero content running out of steam, Nintendo’s prospects for licensing its many characters and concepts is remarkable.
But the real “big news” for Nintendo is the many rumors surrounding it. Specifically, big names like Google (NASDAQ:GOOG, NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) are supposedly engaged in high-level partnership or buyout talks with Nintendo. In September, rumors dropped that Nintendo partnered with Google to create a next-gen virtual reality gaming headset. Later that month, leaked emails revealed that Microsoft was considering fully acquiring the Japanese gaming company.
Of course, none of those rumors are solidified, and could be dead in the water. But that amount of high-level interest, coupled with an inarguably strong licensing opportunity and popular gaming products, means Nintendo is among the low-risk, high-reward stocks that could center your portfolio.
Sharkninja (NYSE:SN), the appliance manufacturer, is another one of the low-risk, high-reward stocks that could easily triple by 2030. The stock hit the market at an inopportune time – this summer – but already proved shockingly resilient. Today, shares hover right around their initial listing price despite wider markets rapidly declining. But stock strength isn’t what sets Sharkninja apart. Instead, this low-risk, high-reward stock has underlying operational fundamentals that position it to explode in coming years.
Sharkninja’s core model is simple but genius: it offers high-end, semi-luxury appliances like ice cream makers and fancy coffee machines at an affordable price point. In essence, Sharkninja targets consumers at the nexus of budget-focused shopping with an eye toward quality. In today’s economy, that alone sets Sharkninja apart as it offers quality products built to last, aligned with shrinking budgets. True to form, the company’s sales expanded 20% annually since 2008 with little sign of slowing.
For proof that Sharkninja stock could triple by 2030, look to recent analyst action. Jefferies pegs Sharkninja’s price target at $67 per share. That’s nearly twice today’s price, indicating a massive upside despite a down economy. Even bearish analysts, like Goldman Sachs, put SN stock’s fair value more than 25% beyond today’s per-share price.
Albemarle (NYSE:ALB) is a mining stock that crashed this month, falling nearly 25% in just a few days after a series of downgrades. But those downgrades, based on short-term electric vehicle (EV) demand stats, hide Albemarle’s low-risk, high-reward potential. Lithium demand, Albemarle’s prime production, is set to grow by 27% annually through 2030. Likewise, analysts expect revenue in the sector to grow 5X or more over the same timeframe. That alone can cool concerns about lithium producers and demonstrate that Albemarle is oversold.
However, Albemarle is uniquely positioned to capture the largest lithium demand sector, setting it apart as a stock that could triple by 2030. Experts expect China to comprise almost half of global lithium demand by 2025. Albemarle’s refineries’ geographic co-location with Chinese manufacturing facilities streamlines supply chains and makes Albemarle the go-to lithium producer to feed hungry Chinese demand.
Albemarle’s recent stock woes, if anything, represent an ideal entry point to capture long-term EV enthusiasm. This mining stock, trading at 1.62 price-to-book, is the definition of low-risk, high-reward.
On the date of publication, Jeremy Flint held no positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.