These 3 Stocks You've Never Heard of Can Double Your Money by 2020

It's tempting to only buy stocks that you know. It's called familiarity bias: We're more comfortable with the companies that make the products and services we buy, or that we hear about on the news.

But many companies that offer great investment opportunities are "invisible" to us.

We never interact with them personally, but their products and services are critical to our day-to-day lives.

Stocks to Buy

These companies make the world run. They bag your food products and allow online retailers to ship you gadgets and clothes. They have the infrastructure that enables people across the world to stay connected in demanding situations.

We've got three of these "invisible" stocks to buy for you today.

You may have never heard of these companies. But they have huge profit potential.

One of them leads an industry set to grow 87% by 2021. Based on earnings, another could double its share price in less than two years.

And because so few people are paying attention right now, each of these picks is currently undervalued. Their shares are due for a rise, so now's the best time to buy.

Let's take a look at our first "invisible" stock to own...

 "Invisible" Stocks to Buy, No. 3: Eagle Materials Inc.

Eagle Materials Inc. (NYSE: EXP) started in 1963 as a subsidiary of Centex Construction Products. The Dallas-based company spun itself off in 2004. It's a leading provider of materials you probably don't think much about but absolutely need.

Gypsum wallboard, for example, generates 34% of Eagle's sales. You probably know it better as drywall, the material of choice for walls and ceilings in nearly every type of home and building. Eagle is the fifth-largest wallboard producer in the United States, with a capacity of nearly 4 billion square feet per year.

At $566 million annually, cement represents 41% of Eagle's sales. The company operates seven cement production facilities spanning from Ohio, to Texas, to Nevada, producing 5 million tons per year.

Cement has been a significant growth area in over the past several years. According to the Portland Cement Association, U.S. cement demand was at about 70% of domestic capacity in 2011. By 2017, that figure was over 90%. Eagle Materials expects that figure to keep growing - beyond 100% - in the coming years.

Between wallboard, concrete, and several other segments, Eagle Materials operates 40 different production facilities delivering to different regions in the country. No one customer accounts for 5% of revenue, and the top 10 customers represent less than 25%. So the company is not dependent on any one factor for success.

EXP currently sits roughly in the middle of its 52-week range, at $105. But analysts are highly positive on the stock. According to FactSet, eight out of nine analysts rate Eagle Materials a "Buy" or "Overweight," with an average target price of $130.14. That would be a 24% gain from today's price.

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The company's earnings call is coming up on May 15. It beat expectations last year, reporting earnings per share (EPS) 18% higher than the same quarter last year and a 19% growth in sales. If Eagle meets analyst expectations, it will post 32% growth in EPS in the upcoming fiscal year.

With profit margins at a comfortable 18.5% and a solid reputation for providing quality materials at a low cost, Eagle Materials' stock should fly high for years to come.

"Invisible" Stocks to Buy, No. 2: Iridium Communications Inc.

Speaking of flying high, our next pick might be inconspicuous here on Earth. But out in space, its satellites are a dominant presence.

Iridium Communications Inc. (Nasdaq: IRDM) provides communication where land-based services won't do. This includes communications for construction and utilities applications, or among aviation fleets for commercial and government purposes. It includes maritime applications, from fishing and merchant shipping to research vessels. And it includes communications for the U.S. Department of Defense, ranging from emergency communications in the field to keeping soldiers in touch with people back home.

On May 19, with the help of SpaceX, Iridium will be launching 10 brand-new IridiumNEXT satellites into space. It's part of a $3 billion, eight-launch overhaul that will put a total of 75 new satellites into orbit by the end of 2018 - one of the largest technology upgrades ever performed in space.

IridiumNEXT will make this company the go-to contractor for every enterprise and government agency with critical communications needs for years to come. If space is the final frontier, Iridium owns it.

Before this landmark project, Iridium had been growing at an astonishing clip. EPS in 2017 more than doubled from the year before, from $0.89 to $1.82.

In spite of that, most analysts expected a poor first quarter in 2018. That's not because they lacked faith in the company. They just figured the capital expenditure of the IridiumNEXT program would begin to weigh down earnings for a while.

It's true that earnings went down. But the company managed to beat analyst expectations by 133%.

Iridium also boosted its total subscribers to nearly 1 million. Most notable was the year-over-year growth in subscribers to the company's Internet of Things (IoT) services. Government IoT subscribers rose 24% to 51,000, and commercial IoT subscribers rose 25% to 538,000.

According to Forbes, the IoT industry is projected to grow at a 17% compound annual growth rate through 2021.

In spite of a temporary dip in earnings, it's easy to see why analysts are fond of this stock. On May 9, Hamed Khorsand, of BWS Financial, issued a "Buy" rating on Iridium, with a price target of $22. That would be an 85% gain from its current price.

With this a stock, you can own some prime real estate in space, and you'll be enabling some of the most important communications that happen down on Earth.

You probably won't mind when the stock price takes off, either.

Finally, our No. 1 stock is on pace to double in share price by 2020. Take a look...

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"Invisible" Stocks to Buy, No. 1: International Paper Co.

Paper companies may seem nearly obsolete in 2018, but International Paper Co. (NYSE: IP) produces materials that go into making everything from packaging to diapers to clothing. They're all products that aren't going away any time soon.

Based in Memphis, International Paper has been around since 1898 and has a sterling reputation. It has made Fortune's list of the "World's Most Admired Companies" in 14 out of the last 15 years, and the Ethisphere Institute's list of the "World's Most Ethical Companies" for 11 straight years.

One of IP's more interesting segments is global cellulose fibers, accounting for $11 million in operating profits last quarter. This is the kind of plant-based material that goes into tissues and baby diapers, as well as into materials to make cars, home appliances, and construction materials. According to Research and Markets, this market is expected to grow at a compound annual growth rate of 9.7% through 2021.

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But International Paper's bread and butter is industrial packaging, accounting for $437 million (about 85%) of operating profits last quarter. This has been a major growth industry in the e-commerce era. According to market research firm Freedonia, e-commerce accounts for two-thirds of all cardboard box purchases today. So online shopping growth will be a major catalyst for Internal Paper for years to come.

And don't discount the printing paper business - about 12.5% of IP's operating profits. Though the digital age has changed the way we use paper, there is still plenty of demand out there that International Paper satisfies. That includes commercial printing, envelopes and folders, and even bags for food products. IP also operates 18 recycling centers around North America to turn more than 6 million tons of recovered paper into new products every year.

International Paper beat EPS expectations in its most recent quarterly report, posting a 56.7% improvement over the same quarter last year. If current analyst expectations hold up, IP will improve its EPS by an exemplary 44% overall this fiscal year.

That would put the stock on pace to double in less than two years.

So it's not surprising that FactSet shows an average rating of "Overweight," with a target price 19% higher than its current price of $53.50.

We think it could do even better...

Its trailing P/E Ratio - reflecting how investors have priced the earnings already made - sits at 8.3, compared to an industry average of 12.94. If the stock came up to an average ratio, that would mean a 56% increase in price.

Plus there's a solid dividend, which has risen 80% since 2012 and currently yields 3.69%.

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About the Author

Stephen Mack has been writing about economics and finance since 2011. He contributed material for the best-selling books Aftershock and The Aftershock Investor. He lives in Baltimore, Maryland.

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