02/06/2014 08:38 pm ET Updated Apr 08, 2014

Hidden Profitability Investing 101

Sometimes investors look at investing in two ways: safe, incremental investments and risky, high-return ventures. Yet there is another option. Occasionally, little-known market opportunities arise that afford investors with relatively good security with excellent return value. Everyone wants these gems, but few expend the energy to find them. Rather, they get a hot tip from a friend of a friend. However, savvy investors are seeking little-known places and reaping steady rewards for their labor. The secret is the same as the mantra for real estate: location, location, and... well, you get the point. Some of the best investment opportunities are in the most obscure places. However, there are clues that investors can use to find them.

Clues Revealing Where to Look

Follow the "demand trail." All markets are based on the basic principle of supply and demand. High demand often equates to high prices and excellent returns, especially if the product/service is used throughout the world. Sometimes prominent organizations can help investors find demand. For instance, the United Nations Educational, Scientific, and Cultural Organization (UNESCO) listed the Argan tree as an endangered species, and in 1998 it designated Morocco's Argan Forest a UNESCO International Biosphere Reserve. Interestingly, the oil extracted from nuts of the trees is a highly sought-after product. A small amount of research revealed to some investors the potential of the little-known company Essence of Argan. In just under three years, the pure Argan oil seller has stunned fashion and beauty communities with this UNESCO-protected product.

Investors can also look at companies that are finding ways to monetize new markets. "Social media" has been a buzzword among companies, but finding sound ways to monetize this communication tool has proved difficult. Some businesses like Streamlined Efficiency LLC are utilizing social media and other online market areas to find hidden profitability through media planning, lead generation, and software development.

First Quarter 2014 Outlook

In terms of stocks, the first quarter of 2014 is expected to be riddled with challenges. Fund managers sold shares to secure profits of 2013's gains. Everyone is on edge about the possibility of Fed interest rate changes. U.S. corporate profits have begun to weaken, and auto sales have slowed. The director of U.S. financial economics at HIS Global Insight, Paul Edelstein, remarked that global markets are due for a correction -- between 5 to 10 percent losses. Smart investors should take note and look for hidden profitability in smaller, safer markets.

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