Regular readers know that our models follow the Wall Street analyst recommendations closely, but not the way that you might think. Typically, investors love to buy hot stocks that analysts are heavily recommending as a buy, as it feels good to run with the crowd. Intuitively though, you should be looking for the stocks that Wall Street hasn’t already blanketed with buy recommendations if you really want to make money.
Why? Think about it. If everyone has already recommended the stock as a buy, then there’s no room for more recommendations to drive prices higher.
Instead, if you’re able to find the hot stocks that are rocketing higher and the analysts have missed so far … well now you’re getting into something that’s more likely to see upgrades that will drive prices even higher. We call them “underappreciated outperformers.”
The following seven stocks are on our most recent list of underappreciated outperformers and represent stocks that you should consider before the Street catches on to what they’ve missed and start the upgrade cycle.