Nothing fishy about under-the-radar stocks Tassal now has what institutions love - free cash flow. Photo: Bruce Miller Spotting stocks that are under the radar and that don't have institutions on the register puts you in the running for big returns when those big investors climb on board. The investment heavyweights are buying Tassal, the largest producer of salmon in Australia, following its introduction into the ASX 300 Index this month. Late last month National Australia Bank increased its stake to 6.3 per cent. When this writer first tipped the salmon harvester in May 2012 it had a market cap of just under $200 million. Its market cap is now $455 million and is on the road towards tripling our subscribers' money. But what do these professional investors want? Ivor Ries, an analyst with RBS Morgans, summarises the driving factors of fear and greed, when he says, "After what's happened with the mining services sector, people are looking for companies with a longer term structural growth story, rather than short-term cyclical story." These fund managers are no longer keen to invest in companies prone to the mood swings of the economy. Many of their funds have been punished after heavily investing in mining services stocks. Many of these stocks have plummeted in the past 12 months as big projects have been mothballed. Their new target is companies whose earnings are based on themes that they can see are generating profit growth - online businesses, retirement living, allergy-free foods and demographic changes. Tassal now has what institutions love: free cash flow, which refers to monies which enter the company's coffers after the payment of all its costs, its capital expenditure commitments and its dividends. This is cash Tassal can use to grow and to increase dividends in the future. It spent about $200 million over two years on its hatchery facilities off the coast of Tasmania in Macquarie Harbour and now it has a virtual monopoly on sales to the big supermarkets in Australia. And even after its rise, its fundamentals still look good. Its PE of 14.1 times is slightly below the market average of 15 times, and it has a dividend yield of 4 per cent - which is good for a growth stock (the average for the market is 4.6 per cent). So which stock do we think will be another Tassal? There are many potentials out there - we cover more than 90 stocks - but one whose shares are on the up and has so far returned subscribers 35 per cent is Infomedia (IFM). The company is one of three leading publishers of car parts and prices, servicing dealer networks around the world. It is mission critical for auto-dealers to have its electronic parts catalogue (EPC) on hand. There have been a number of institutions popping up on its share register - Perpetual, Celeste Funds Management, Macquarie Group and Colonial/CommBank - in the wake of the retirement and sell-down of founder and executive chairman Richard Graham. Graham sold his 102.5 million shares (just over a third of the company) to institutional investors in late August and will remain as chairman. Moreover, it is this trend that investors in small caps are looking for: to spot something that isn't held at the big end of town and then for returns to grow as it becomes evident to the institutions that the company can make them big money. Graham's exit is allowing this to happen.