In an ocean of listed stocks, it’s likely that investors miss on good businesses that are trading at attractive valuations. Once these undiscovered stocks picks are in the limelight, the rally can be ferocious.
Keep in mind that stocks listed on main exchanges have higher visibility. In general, investors look at stocks trading on the OTC exchange as trading or speculative bets. However, that’s not always true. There are quality businesses that have stocks listed on the OTC exchange.
The following OTC stocks represent companies with good fundamentals and are trading at a valuation gap. They are positioned for healthy growth and upside in cash flows.
As markets look for value, these stocks are likely to be in the limelight. Let’s talk about the specific business factors that can be catalysts for a big rally in the coming quarters.
Lundin Gold (LUGDF)
Since Lundin Gold (OTCMKTS:LUGDF) trades in the OTC exchange, the stock has been under-the-radar. However, the gold miner has strong fundamentals and quality assets for value creation. Notably, LUGDF offers a healthy dividend yield of 2.9%.
While gold has been trending higher, the stock has remained sideways in the last 12 months. I remain bullish on further upside for gold with potential rate cuts impending. Therefore, it’s likely that LUGDF stock will go ballistic after an extended period of consolidation.
A big positive about Lundin Gold is the all-in-sustaining-cost. For 2024, the company estimates the AISC at $820 to $890 per ounce. The AISC is likely to remain below $1,000 an ounce in the next few years. With gold at $2,300 an ounce, LUGDF is positioned to deliver robust EBITDA and free cash flows.
Moreover, Lundin Gold has 5.5 million ounces of mineral resources. This provides steady production growth visibility for the coming years. Therefore, as cash flows swell, it’s likely that capital investments will be aggressive and growth will accelerate.
Aker BP ASA (AKRBF)
Aker BP ASA (OTCMKTS:AKRBF) is another high-quality stock that’s listed on the OTC exchange. The oil & gas exploration company with focus on the Norwegian Continental Shelf is undervalued and a potential multibagger.
Besides trading at attractive valuations, AKRBF stock offers a robust dividend yield of 9.19%. Considering the cash flow potential, I believe that dividends are sustainable. Further, if oil trends higher, a strong case can be made for healthy dividend growth.
Two big factors are behind a bullish stance for Aker BP. First, the company has 2P reserves of 1,716mmboe and 2C contingent resources of 809mmboe. The asset base is robust and provides steady production growth visibility.
Further, the full portfolio asset break-even is in the range of $35 to $40 per barrel. This allows Aker BP to deliver stellar cash flows even if oil remains around $80 per barrel. For Q1 of 2024, Aker reported revenue and EBITDA of $3.1 billion and $2.8 billion respectively. Further, operating cash flow for the quarter was $1.5 billion. Therefore, with an investment grade balance sheet, strong asset base and robust cash flows, AKRBF stock is a potential value creator.
Curaleaf Holdings (CURLF)
Curaleaf Holdings (OTCMKTS:CURLF) stock is possibly the best pick among cannabis stocks from the OTC exchange. While CURLF stock has surged by 81% in the last 12 months, it remains undervalued and has not been in the limelight. I remain bullish on multibagger returns from current levels considering the growth potential.
The first point to note is that Curaleaf Holdings has presence in 17 states in the U.S. The company is well positioned to capitalize on the impending growth. Even without federal level legalization, the cannabis industry in the U.S. is likely to be worth $71 billion by 2030.
Additionally, Curaleaf Holdings has been making aggressive inroads in Europe and some emerging markets. Last month, CURLF acquired Northern Green Canada. With the latter having EU-GMP certification, Curaleaf Holdings intends to expand into Germany, Poland and U.K. Additionally, the acquisition will help entry into markets like Australia and New Zealand.
Importantly, the management has already indicated that 2024 will be a catalyst year. With the possibility of growth acceleration in the coming quarters, I am bullish on CURLF stock.
On the date of publication, Faisal Humayun did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.