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These cheap, under-the-radar stocks may be worth buying for the second half

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With the major averages near record highs, many stocks look untouchable.

But a few lesser-known names that are trading at attractive valuations are on track to finish the second half with a rally, two traders told CNBC on Friday.

“I think in the second half, what you’ve really got to be looking for is those value or cyclical stocks,” Blue Line Capital founder and CEO Bill Baruch said on CNBC’s “Trading Nation.”

His under-the-radar pick was Cheniere Energy, a liquefied natural gas producer with a big presence in Texas and Louisiana.

“It’s held up really well even though energy itself has sort of taken a little breather over the past couple months,” Baruch said, adding that natural gas tends to be a “sticky” space in terms of investment.

Better yet, Cheniere’s stock is “holding really well out above that 2014 high and it’s … building a base,” typically a sign of more upside ahead, he said, pointing to the chart.

Baruch also liked Wells Fargo, saying it could be an under-the-radar winner in the intermediate term.

“They’re really getting the scandal of the account openings in the rearview mirror,” he said. “If you’re looking three to five years out, I think Wells Fargo is going to outperform. They were one of the best performers prior to all that.”

Wells Fargo has not yet recaptured its 2019 highs, though other bank stocks such as JPMorgan and Bank of America have, Baruch noted — but the right catalyst could kick-start a sustained move higher, he said.

“You are breaking a trend line … really decisively out above there now, going back to the 2018 high,” he said.

“I think we’re going to see a tail wind that moves this to ballpark $55 and then we could see maybe $60 from there,” Baruch said.

Wells Fargo shares fell by less than half of 1% to $48.68 on Monday afternoon after hitting highs not seen since January 2020. A move to $55 or $60 would be about a 13%-23% gain.

Another quiet winner could benefit from pent-up consumer demand in the second half, Chantico Global founder and CEO Gina Sanchez said in the same interview.

“The recovery has been a huge boon” for Discover Financial Services, which has managed to grow its offerings and expand to new regions while the economy came back, said Sanchez, also chief market strategist at Lido Advisors.

“We think that given what the outlook is, that they’re actually very attractively priced right now,” she said.

“Excess savings that have been burning holes in some Americans’ pockets are being unleashed in terms of consumption demand and that goes right to the credit cards. And Discover is one that is still picking up market share and is benefiting and growing,” she said.

Discover Financial Services shares fell by half of 1% to $129.40 in Monday afternoon trading.

Disclosure: Lido Advisors owns shares of Discover Financial Services.

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