These days the most popular stocks to follow are either meme plays or the most blue-chip S&P 500 companies. Very few investors seem to be interested in hidden gem stock picks.

About halfway through September, the index is down almost 15% year-to-date. Of the 11 sectors in the index, only energy (up 44.8%) and utilities (up 7.5%) are up for the year. Of the 503 stocks in the index, 318 are down for the year.

One possibility for finding hidden gem stock picks to beat the September slump is to limit your search to the companies in the index that are winning in 2022. However, of the 184 in positive territory, most are either energy or utilities-related, which makes sense given those two sectors are the clear winners this year. 

So, we need to go further afield to find three winners to bet on to beat the September slump.

I’ll use three criteria to find my diamonds in the rough: 1) A constituent of the S&P SmallCap 600 or the S&P MidCap 400, 2) Less than five analysts covering the company’s stock, and 3) An EBITDA (earnings before interest, taxes, and depreciation) margin of 20% or higher. 

According to my stock screen, I’ve got 31 options. Here are the three I’d bet on.   

JBG Smith Properties (JBGS)

If you live in the Washington D.C. area, there’s a good chance you live or work in one of JBG Smith’s (NYSE:JBGS) properties. The company’s current portfolio is 15.5 million square feet of commercial, multi-family, and retail with another 9.8 million in development. 

The company’s long-term plan is for 70% or more of its portfolio to be focused on the National Landing section of Washington D.C., which includes the neighborhoods of Crystal City, Pentagon City, and Potomac Yard.  

As the company’s latest presentation highlights, National Landing is “positioned to be the nation’s premier live-work-play destination.” The area has more than $6 billion in infrastructure initiatives that are fully committed to being completed in the future. It’s also home to Amazon’s (NASDAQ:AMZN) second headquarters. It sold its Pen Place property to Amazon in May for $198 million. 

I like that its annualized net operating income is expected to grow from $300 million to $425 million by Q4 2026. And that doesn’t consider the monetization of 8.6 million square feet currently in the pipeline. 

Yielding 4% at current prices, its stock hasn’t been this cheap since October 2020.

Embecta (EMBC)

Embecta (NASDAQ:EMBC) is a New Jersey-based medical device company spun off by Becton Dickenson (NYSE:BDX) in April 2022. Embecta was BD’s Diabetes Care business. Like most spinoffs, it was done to add value for Embecta shareholders. Shareholders got one EBDC share for every five shares held in Becton Dickenson.

Embecta is the world’s largest producer of diabetes injection devices. It manufactures approximately 8 billion annually for 30 million patients. It has about 800,000 square feet of manufacturing space in the U.S., Ireland, and China. 

In mid-August, it released its Q3 2022 results. They included a 2.0% increase in revenue to $291.1 million, while its net income was 117.9 million, 40.4% lower than a year earlier. Although the quarter’s numbers don’t seem reasonable, the company said the comparables between this year and last aren’t meaningful.   

What’s more important is that the business delivered results that were better than analysts expected — revenues were $13 million higher than the consensus while its earnings per share were $1.07, 20 cents higher than analyst expectations — while it raised its guidance for the final quarter and second half of 2022.  

Mueller Industries (MLI)

Mueller Industries (NYSE:MLI) is the largest of these three stocks, with a $3.6 billion market capitalization. If you invested $1,000 in the March 1991 initial public offering of the manufacturer of copper, brass, aluminum, and plastic products, today you would have $76,380, a compound annual growth rate of 15.0%. 

I’d take that every day and twice on Sundays. 

Mueller reported its Q2 2022 results in July. On the top line, its sales were $1.15 billion, 13.6% higher than a year earlier. On the bottom line, it had a net income of $206.6 million, 89.9% higher than Q2 2021. The company benefited from higher prices across all of its businesses.  

The company acknowledged in its quarterly report that sales from building construction would slow in the months and quarters ahead. However, it also said its businesses have healthy backlogs and are operating at capacity. 

I’m excited by the company’s cash generation and financial position. In the trailing 12 months ended June 25, it had free cash flow (FCF) of $470 million. Based on its market cap, it has an FCF yield of 13.1% [FCF $460M divided by $3.6B market cap]. I consider anything above 8% to be value territory. 

I also like that it finished the quarter with just $2.2 million in debt and $202.5 million in cash and cash equivalents. It’s built as a fortress against future economic shocks.

On the date of publication, Will Ashworth did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.