According to UBS, there are some stocks on Wall Street that are completely disliked by analysts and investors, but their fundamentals are improving, making them potential buying opportunities for contrarian investors. Stocks have risen to record highs recently, mainly led by large-cap stocks. The S&P 500 is up 10% this year. However, some large-cap stocks have not participated and remain out of favor. In a Thursday note, strategist Jonathan Golub ran a screen for his clients to find stocks that are under-appreciated by Wall Street and forgotten by investors over the past year. The firm’s specific criteria are: below-average analyst consensus rating, significant 52-week decline, and strong three-month earnings momentum. One of the stocks on the list was Ford Motor. The auto stock has fallen 4% so far this year. Most analysts currently covering the stock give the stock a hold rating, projecting an upside of about 16% against the consensus price target. Bernstein initiated Ford shares with an outperform rating last week.Analyst Daniel Loeska’s $16 price target suggests the stock could surge as much as 38% from here. “The iconic automaker continues to benefit strongly from a policy-driven investment cycle in its core markets and the U.S.,” the analyst wrote. “While electric vehicles are a big challenge to deliver, the company’s EV division has a clear path to significant operating leverage and ultimately profitability.” Airbnb also fits the criteria as an “out of favor” stock. Shares of the short-term rental platform have risen 7% since the beginning of the year. Most analysts give Airbnb shares a hold rating. Analysts’ average price target indicates the stock could rise another 5% from current levels. Earlier this week, Wedbush upgraded Airbnb shares to an outperform rating. Analyst Scott Devitt noted that the company’s recent weakness on the back of first-quarter profits opened an attractive entry point. “While we believe Q2 guidance is conservative given the positive travel data points so far in the quarter, investors should use this period of relative weakness to identify potential upside to near-term expectations,” he wrote. Cruise operator Norwegian Cruise Line made the list despite its shares plummeting 18% this year. Analyst consensus is a hold rating for the stock, with forecasts calling for the stock to rise an average of 26% from Thursday’s closing price. Truist and Mizuho both upgraded their ratings on the stock to buy from hold earlier this week. Mizuho analyst Ben Chaiken believes sentiment toward the stock is finally shifting as valuations become more attractive. “After roughly two years of significant relative underperformance (~-160% vs. RCL since Jan 2023), NCLH is streamlining its operations (e.g., cost reductions) that should lead to upside to near-/mid-term expectations,” Chaiken wrote. Other companies on UBS’ list included Pfizer, Gartner, Clorox, Estee Lauder and Northern Trust. —CNBC’s Michael Bloom contributed to this report.
These stocks are the Street’s most hated, but their fundamentals are improving.
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