We recently published a list of 10 Best Under-the-Radar Stocks to Buy Now. In this article, we are going to take a look at where DLocal Limited (NASDAQ:DLO) stands against other best under-the-radar stocks to buy now.
The market environment is currently dominated by headlines about mega-cap tech stocks and the volatility induced by tariffs. The recent trade war ignited by the U.S. President’s new tariffs has sent ripples throughout the globe, affecting all the listed major stocks. Savvy investors, however, are increasingly turning towards comparatively less famous equities that offer significant growth potential. Though the market indices have experienced a modest decline owing to the tariff war between the U.S. and China, a few under-the-radar stocks have shown resilience.
READ ALSO: 10 Dividend Trap Stocks to Avoid in 2025
Recent market fluctuations and their resulting impact on the market indices stress the need to explore beyond the usual suspects. We cannot always look up to the value stocks, as the reports from the past three decades have shown that growth stocks outperform them. The changing trends point towards substantial opportunities outside the traditional investments in sectors and stocks that are yet to be covered by the financial media headlines.
On the other hand, the overgrown influence of a few large caps has increased the concerns regarding market concentration and the long-term sustainability of such below-the-radar stocks. According to Barron’s, a university-conducted study revealed that a few disproportionately small subsets of publicly listed companies had been responsible for the total net wealth creation in the U.S. equity market since 1926. Median stock, meanwhile, has historically underperformed risk-free assets. The revelation necessitates identifying emerging companies with traits of future market leadership before they get flooded with institutional capital.
Though the recent economic shifts hurt many large caps, they also offer a favorable backdrop for identifying emerging stocks. For instance, the Federal Reserve’s change in interest rate cuts has reduced borrowing costs, increased credit availability, and contributed to a conducive climate for some companies to thrive in the market.
Undercoverage of these high-potential companies leads to informational inefficiencies, which retail and institutional investors perceive as opportunities. Many of these companies maintain a strong growth potential within their respective industries that aligns with the long-term shareholder value creation.
Sometimes, the sectoral shifts can also favor the distribution of growth opportunities for a few stocks over others. For instance, after retaliation from China, the biggest importer of technologies and related materials, the U.S. gave tariff exemptions to electronics. This led to growth in the value of many large-cap tech stocks. However, the subsequent announcement from President Trump that these exemptions are only temporary has caused investors to rethink their investment decisions. It underscores the need to look for under-the-radar stocks that combine growth potential and not-yet-exploited quality.
In this regard, we have compiled a list of 10 under-the-radar stocks guided by fundamental screening and long-term earnings potential. In addition to financial stability, the stocks on our list demonstrate attributes common in past outperformers before their breakout phases.
Our Methodology
Our article employs a screening methodology to identify the best under-the-radar stocks with strong fundamentals. Primarily, our criteria include market capitalization below $10 billion to limit our search between micro, small, and mid-cap classifications. We also included only those stocks with positive earnings per share (EPS) growth over the past five years, reflecting consistency in profit-making. We have set the institutional ownership cap to 30% to pick those stocks with limited analyst coverage and more significant discovery potential. Our article further excluded stocks with a forward price-to-earnings (P/E) ratio of more than 20 to target relatively undervalued equities. Additionally, all the stocks have a debt-to-equity ratio under 1 to ensure a conservative capital structure, thereby ensuring financial stability. We compiled a list of 25 stocks and then listed 10 stocks that were most popular among hedge funds, according to Insider Monkey’s database of Q4 2024.
All the data in the article was taken from financial databases and analyst reports, with all information updated as of April 15, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A modern payment processor with illuminated buttons in a busy financial district.
DLocal Limited (NASDAQ:DLO)
Institutional Ownership: 12.62%
No. of Hedge Funds: 19
DLocal Limited (NASDAQ:DLO), located in Uruguay, provides cross-border payment solutions connecting global merchants to emerging market consumers. The company serves digital platforms; hence, its customer base comprises sectors like e-commerce, travel, and streaming. It offers a single API for collections and disbursements across Latin America, Asia, and Africa. The company distinguishes itself from its competitors using its local payment network coverage and rapid integration capabilities. With a scalable infrastructure, the company’s growth continues to increase in underbanked regions alongside emerging digital commerce users.
DLocal Limited (NASDAQ:DLO) recorded a 45% year-over-year increase in its total payment volume in 2024. However, this was followed by a decline in gross profit in its largest markets, Brazil and Mexico. Currency devaluations in some regions, like Nigeria, further made an impact on the company’s revenue growth. On the other hand, there is a notable expansion in the team, with 194 new talents recruited into the company. Technology and product development are receiving increased attention from this expansion, as the company sees them as necessary to move forward. Twenty new payment methods for pay-ins and seven for payouts were introduced by the company, and securing nine new licenses globally has increased projections for 2025 revenue to $1 billion.
Institutional ownership for DLocal Limited (NASDAQ:DLO) stands at 12.62%, with 19 hedge funds showing interest in the stock, as per Insider Monkey’s Q4 2024 database. Such low visibility suggests that the stock could be one of the more promising quiet picks for investors today.
Overall, DLO ranks 5th on our list of best under-the-radar stocks to buy now. While we acknowledge the potential of DLO, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than DLO but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
Disclosure: None. This article is originally published at Insider Monkey.
