3 Top Stocks You've Been Overlooking

By Timothy Green, Tyler Crowe, and Cory Renauer Markets Fool.com

The best place to find great investments is often where no one else is looking. While everyone and their grandmother follows heavyweights like Apple and Amazon, there's a wide world of overlooked stocks that garner little attention.

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We asked three of our contributors to discuss stocks that don't get the attention they deserve. Here's why Cintas (NASDAQ: CTAS), Best Buy (NYSE: BBY), and Celldex Therapeutics (NASDAQ: CLDX) are three top stocks that you may be ignoring.

Boring is beautiful

Tyler Crowe(Cintas):Too many investors look to industries like technology or biotech for market-crushing growth stocks when you can find them in boring businesses. Consider Cintas. At its core, it is a uniform rental company that has also branched out into some ancillary segments such as cleaning services, first aid and safety equipment sales, and compliance services. It's a business that hasn't changed drastically over the past 100 years, yet Cintas' stock has more than doubled over the past three years and has more than tripled the S&P 500 over that period on a total return basis.

None of those businesses are anything to write home about, but what makes the company a fantastic investment is its focus on generating returns for investors over the long term. Cintas maintains modest revenue growth, high margins, and exceptional returns on equity. It also generates a lot of free cash flow that can be used to pay a fast-growing dividend and buy back stock.

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CTAS Return on Equity (TTM) data by YCharts.

Two other elements make Cintas worth a look as a long-term investment. One is that the founding family owns a considerable stake -- a little over 20% -- and the company has increased its dividend payments every year for 32 years straight. Traits like that are positive signs when you want to make an investment with a multidecade time horizon.

Cintas is a resilient business, and its prospects very much wax and wane with the overall health of the economy. Perhaps once robots have replaced all humans in the workplace, then the need for uniform rental and cleaning services will no longer be necessary. We're still a long ways away from that happening, and that makes Cintas a compelling investment that you may not have considered before now.

An overlooked retailer

Tim Green (Best Buy): It can be easy to ignore the entire retail industry given the growth of e-commerce, but throwing out the baby with the bathwater would be a mistake. Consumer electronics retailer Best Buy has managed to consistently improve its bottom line over the past few years by slashing unnecessary costs, even as it began price-matching Amazon to kill the practice of showrooming. Sales growth has been inconsistent, in part due to a lack of exciting new products, but Best Buy is in a far stronger position today than it was in a few years ago.

Image source: Best Buy.

This profit growth comes despite major investments in e-commerce, which have helped Best Buy drive consistent double-digit online sales growth. The company ships online orders out of its more than 1,000 stores, helping to cut down on average shipping times and better compete with Amazon. Online sales surged 20.8% in fiscal 2017.

With annual adjusted earnings per share of $3.56 and $2.56 billion of excess cash on the balance sheet, Best Buy stock trades at a cash-adjusted P/E ratio of just over 11. This cash will help it fund $3 billion of share buybacks over the next two years, enough to buy back one-fifth of all outstanding shares. Further earnings growth will be more difficult going forward, with much of the low-hanging fruit already picked when it comes to cost-cutting. But Best Buy is well positioned to be competitive in a world where consumers are increasingly shifting online.

A lot for a little

Cory Renauer (Celldex Therapeutics, Inc.):Long-term investors looking for a stock that could more than double over the next couple years might want to revisit or become acquainted with this clinical-stage biotech stock.

Celldex Therapeutics fell out of favor a little over a year ago when its brain cancer candidate, Rintega, performed as expected but technically failed its trial because patients in the standard treatment control group did surprisingly well.Although the company has completely switched gears to focus on new drug candidates entirely unrelated to Rintega, anenterprise value of just $224 million makes this one of the most overlooked stocks in biotech right now.

The company's largest near-term catalyst is a clinical trial with glembatumumab vedotin, or glemba, for the treatment of patients with an extremely difficult to treat form of breast cancer. The patients also have tumors with glemba's target protein on their surface. Once glemba finds its target, it's invited inside the cell where it unleashes a super-lethal dose of chemo.

In a previous study, similar patients survived more than twice as long without signs of disease progression than those receiving standard treatments. An ongoing trial should finish enrolling 300 of these patients in September, and if the results fall in line with previous observations it would probably lead to an eventual approvaland a soaring stock price.

While I'd say glemba's potential as a breast cancer treatment alone makes Celldex stock a buy, there's plenty more in the pipeline. Glemba itself is in three other mid-stage clinical trials, one sponsored by the company for skin cancer, plus two investigator-sponsored trials for rare malignancies.

Beyond glemba, immune stimulatorvarlilumab, is in a combination study with the blockbuster drug Opdivo as a possible combination therapy for treatment of a variety of tumors types. Further down the road, it's has a handful of drugs aimed at various targets in early-stage clinical trials.

The company finished 2016 with $189.8 million in cash and liquid assets after burning through about $128.5 million last year. This should be enough to keep the lights on while waiting for glemba's breast cancer trial results. Add it all up and this is one biotech stock worthy of far more attention than it's been getting lately.

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Cory Renauer has no position in any stocks mentioned. Timothy Green owns shares of Best Buy. Tyler Crowe owns shares of Apple. The Motley Fool owns shares of and recommends Amazon and Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool recommends Celldex Therapeutics and Cintas. The Motley Fool has a disclosure policy.