Investors typically look at that Wall Street analysts for guidance on which stocks they should buy, hold and sell. This is easily done by checking consensus analyst recommendations, which are available on a number of stock research sites. Most investors know that this information can uncover longer-term investment ideas, but what they don’t know is they can also shine a light on a treasure trove of stocks to buy that are about to jump higher — and in a hurry!
The reason? It’s all too frequent for analysts to miss huge movers before they start moving, so at some point, they have to play catch-up to avoid looking foolish. After all, it looks bad to have a “sell” call for months on a stock that’s catching fire.
They play catch-up by upgrading these stocks that are already outperforming. And when they jump on an already strong stock’s bandwagon, their upgrades bring even more buyers into the stock.
Our database tracks companies that have outperformed the S&P 500 Index by a wide margin, yet have low analyst buy recommendations all the same. Historically, we’ve found that these stocks continue performing well thanks to the additional fuel that comes when analysts cave in and deliver upgrades.
Right now, we’re monitoring a list of about 25 such names, but have narrowed it down to seven high-conviction “unappreciated outperformers.” Here’s a look at these stocks to buy before Wall Street finally plays its game of catch-up, including our upside price targets.
Hated Stocks to Buy: Nvidia (NVDA)
Nvidia Corporation (NASDAQ:NVDA) has become the poster child for underloved outperformers as the chipmaker has left its entire industry behind.
Performance-wise, NVDA shares are trading more than 55% higher year-to-date, and 210% higher over the past 12 months. Despite this outrageous performance, only 54% of analysts covering the stock have it ranked a buy. Nearly a third believe Nvidia is a hold, while the remainder want to sell this red-hot stock.
The analysts will capitulate. There’s nothing in the offing to slow Nvidia down — the fundamentals remain strong, and the technical picture remains bright. We expect NVDA to tack on another 20% to 30% before the end of the year, driven in part by analysts admitting they were wrong.
Hated Stocks to Buy: Hasbro (HAS)
Toy manufacturer Hasbro, Inc. (NASDAQ:HAS) is far from the sexy company that Nvidia is, but hey — the stock is performing!
Shares are almost 50% higher for 2017 amid a rally that has seen Hasbro set new daily highs on a regular basis, grabbing the attention of technicians.
Wall Street has been left in the dust of the rally, though. Only 12% of analysts tracking HAS stock have it ranked a buy. This rating puts the toymaker in the lowest 5% of recommended stocks in our database!
Bottom line? Another positive earnings report (due out July 24) and new highs will force the holdouts to upgrade the stock, which will only push HAS higher.
We’re targeting another 20% gain in Hasbro within the next six months.
Hated Stocks to Buy: Mettler-Toledo (MTD)
Mettler-Toledo International Inc. (NYSE:MTD) is a name many investors don’t focus on. It’s understandable: This company provides instruments and services for laboratory, industrial, packaging, logistics and food retailing applications.
It’s not exciting, but Mettler-Toledo does offer exposure to all industries, including healthcare, and will fundamentally benefit from the currently improving economic backdrop.
MTD shares are trading 45% higher for the year, with strong technical support following the stock higher. Analysts tracking Mettler-Toledo haven’t noticed, however, with only 10% offering up buy recommendations at the moment. The stock is one of the lowest recommended stocks in the S&P 500, the index that these analysts are measured against.
We believe the other 90% of analysts — who all have MTD at a hold — will start upgrading the company after the company’s earnings report on Thursday, July 27. Like Hasbro, Mettler-Toledo is moving to new all-time highs, which will certainly attract more attention.
Watch for the analysts to start jumping on the Mettler-Toledo bandwagon as it breaks to highs above $600, and expect to see another 20%-30% from the shares before year-end.
Hated Stocks to Buy: Baxter International (BAX)
Baxter International Inc (NYSE:BAX) shares are benefiting from the easing of tensions in the healthcare industry as regulatory changes appear to be waning. This and other health-related names are in the beginning of a rally that is likely to last through the year.
Analysts shied away from Baxter and other healthcare companies when overhauls to the industry appeared imminent. At the moment, only 23% of the analysts tracking Baxter have it ranked a buy.
Baxter International stock is up 41% for the year and breaking to new highs, which will start to take a toll on those analysts that have been holding out. Soon, they too will list BAX among their stocks to buy.
Expect headline news and continued technical strength to force upgrades, which in turn will make an $80 year-end target — 27% higher from here — a reality.
Hated Stocks to Buy: Regeneron Pharmaceuticals (REGN)
Biotechnology stocks are another sector of the market that are staging a great comeback. The strength is being driven by the lowered chances for healthcare reform and growing technical and fundamental strength.
According to our studies, companies like Regeneron Pharmaceuticals Inc (NASDAQ:REGN) are seeing cash inflows as value investors are still trying to grab these stocks before they approach their old highs. Analysts haven’t caught that spirit, yet — not even half of the community rates REGN shares a buy.
Watch for the negative sentiment to continue unwinding in the biotech sector, and as a result, analysts will try to get in front of the curve before it’s too late. Regeneron is up 40% year-to-date, but our models suggest another 20% of upside as analysts and investors warm up to this recovery.
Hated Stocks to Buy: Verisign (VRSN)
Analysts moved away from Verisign, Inc. (NASDAQ:VRSN) in 2016 as the shares corrected by about 20%, but the stock has mounted a comeback, leaving those analysts sitting on the sidelines while Verisign scrawls out new highs.
The internet registry and security company has surged, evolving their business alongside the changing environment and bringing their earnings results back to levels that are beating analyst expectations. Revenue growth has remained positive, too, and this fundamental backdrop has helped VRSN’s technical recovery.
At the moment, a full 80% of analysts following Verisign have the stock ranked a hold. The other 20%? They’re in the sell camp. This despite new highs and 30% year-to-date gains.
These analysts will stop holding out soon, though, and start moving back into the bull camp so they don’t miss out on any more gains. We expect the shift in sentiment to result in an additional 25% gain for 2017.
Hated Stocks to Buy: Anthem (ANTM)
Health benefits companies took a beating during the last election cycle, starting in 2015 when the issue of healthcare became such a hot button. During that time, Anthem Inc (NYSE:ANTM) shares dropped more than 30% of their value, bottoming out when the election was over.
Since then, ANTM has bounced more than 60% and is posting new highs. Also, shares are making this market-shattering move with less volatility than the average S&P 500 stock — a dream for any investor.
Analysts must hate dreams, though, as only 47% of those tracking the stock have it ranked a buy. But ANTM is tripling the S&P 500, with less volatility. Wall Street’s pros can’t resist forever.
We expect revenue growth to spur Anthem after next week’s earnings report, due out Wednesday, July 26, before the bell. Expect analysts to concede to upgrades, followed by an eventual 25% gain before year’s end.
As of this writing, Johnson Research Group did not hold a position in any of the aforementioned securities.