Anthony Speciale Stock Market Analyst

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Two Rising Stock Stars Trading Under the Radar

Simply put, it has been an incredible year for the stock market when you look at the major indexes. We’re up over 20%, riding the wave of stimulus cash and the economic reopening of basically the entire planet.

There have been some bumps, but the market has not really cared at all. Rising interest rates have not caused stocks to back down until just recently. Variants of the COVID virus haven’t really upset the market either.

Growing inflation? Who care? Political unrest? So what? Geopolitical problem? Buy stock! Stocks have just continued their steady march higher when you look at the S&P 500 and the tech-heavy Nasdaq.

Rates have stayed reasonable, although they are starting to creep up and will continue to do so into 2022. That will eventually be a threat to the market but so far nobody cares.

And there’s been a huge element of “There Is No Alternative,” or “TINA.” Rates are extremely low. The 30-year bond yields under 2%. Junk bonds pay under 5%. So there’s not really a great alternative where you can get returns that you can get in stocks.

That’s going to end someday, but probably not today. So when I look at the big indexes, they’ve done very well. However, when I look at the Russell 2000, that’s not as profitable this year. It’s up less than 10%.

Small stocks have not kept up, and a few of them have been absolutely crushed along the way. It’s been a big-name stock rally. It’s been epic if you’re in the top five popular stocks. But some of the lesser-known stocks, not so good.

Today, I’m going to give you two of these that have not had a great 2021, but I think they’re poised for a fantastic 2022 and can give you massive gains picking them up at the current bargain prices.

CatchMark Timber Trust, Inc.

First up is CatchMark Timber Trust, Inc. (CTT), which fell sharply earlier this year. They had a joint venture that was a significant portion of their revenue, and it wasn’t working out the way they had hoped.

So they ended that venture arrangement, and it cost them some cash. They lost money on the deal, so they had to cut the dividend by about 30%. Now, this is a real estate investment trust (REIT). REIT investors want income, so once you cut the dividend, they are going to run for the hills.

That’s exactly what happened here. The stock has been absolutely hammered. Here’s the thing… They still own 370,000 acres of timber in Alabama, Georgia, South Carolina and the southeastern portion of the United States.

They sold 18,000 acres of what they had left out in Oregon and used that to pay down debt to further strengthen the balance sheet. Lumber is going to be in demand for several more years, and we’re still short about five million homes just to bring the supply and demand picture back into balance.

Lumber is going to be in demand, and CatchMark Timber Trust, Inc. should do very well now that the joint venture issues are 100% behind them.

The fundamentals are improving, the company should start growing again based on the lumber demand, it’s trading at low multiples of free cash flow and the assets they still own… Even after the dividend cut, the stock is yielding over 6%, which is eventually going to attract some buyers looking for yield.

This is a great inflation play, it’s a great growth story, it’s a great income stock and I think CTT is poised to have an incredible 2022 with returns of 50% or more for investors who take advantage at the current bargain price.

Altice USA, Inc.

Now, we’ve talked about Altice USA, Inc. (ATUS) before.

They’ve combined two businesses: Sudden Link, which is a cable company, basically, with TV, internet and phone. It’s 3.5 million customers, in small markets in states like Texas, West Virginia, Idaho and Louisiana. So that’s one phase of the business.

The other part of the business is Cable Vision. That is similar services for 5.5 million customers in the New York City area. So it’s one big market and several small markets. They made this combination, and it seems to be working out.

The stock has not had a good year, as cable hasn’t been popular. But even if you’re not paying for cable, you’re paying for internet. And yes, there’s a lot of cord-cutting, but there are tens of millions of Americans that aren’t interested in cutting the cord at all.

They’re going to keep their TV and internet services, and the phone business should continue to grow at modest rates.

The company also owns News 12, which is a 24-hour news network in New York City, as well as I24 News and Chedder, which is a brand-new start-up appealing to the younger market.

Those three divisions are very small and could be spun off or sold to bring some cash in, or they could just continue to run them as they are currently.

They are going to continue to grow by acquisitions, and they’ve been doing aggressive stock buybacks, particularly when the price is low. They’ve been really leaning into the very short periods of market disruption we’ve had recently.

It’s trading at incredibly low multiples of free cash flow, the fundamentals are improving rapidly and this stock is grossly undervalued. So ATUS could easily double back to my calculation of the company’s fair values in 2022.