Investing against the grain is never easy. We often find ourselves buying stocks because everyone else is. Or, we sell because the herd is selling. Unfortunately, many of us never question why we may be buying or selling particular stock picks.
Unfortunately, as many of us have learned the hard way, that can be a costly move. Remember, “Men, it has been well said, think in herds; it will be seen that they go mad in herds, while they only recover their senses slowly, and one by one,” noted Charles MacKay in Extraordinary Popular Delusions and the Madness of Crowds. Granted, that was written in 1841. However, what he had to say about the behavior of the herd remains relative to this day.
Below, I’ve listed seven stock picks that may be off the beaten path.
If you believe that crypto isn’t dead, then owning shares of digital exchange Coinbase (NASDAQ:COIN) is one of the top stocks picks to choose for a potential crypto recovery. The good news is that, amid all the carnage in the crypto sector, COIN stock has become very cheap. In fact, shares of Coinbase are now trading at $35, down 86% in 2022 and 90% below their all-time high of nearly $350 a share reached in Nov. 2021.
In fact, as Dec. draws to a close, COIN stock is trading at an all-time low. Helping, CEO Brian Armstrong has reassured investors that company capital is safe on the exchange. It’s also not likely to end up frozen in a bankruptcy filing as we saw with the FTX. Plus, Ark Invest CEO Cathie Wood has been buying Coinbase stock hand over fist.
Another one of the top stock picks to consider is Alibaba (NYSE:BABA). After all, the worst appears to have been priced into the stock. Plus, the worst seems to be over for China, too. Especially as the country moves to lift its COVID-19 restrictions.
If this is your thinking, then by all means snap up shares of Alibaba, the Chinese e-commerce and technology giant that has been dubbed “China’s answer to Amazon (NASDAQ:AMZN).” Run by legendary entrepreneur and visionary Jack Ma, Alibaba is a global leader in everything from online shopping to artificial intelligence. At $88 a share, BABA stock is available at dumpster fire prices. The stock peaked at $310 a share in Oct. 2020, and since then it has come down 73%. If you believe things can only get better in China, then Alibaba is a stock for you.
With the cruise line industry starting to show signs of life, I believe Carnival Corp. (NYSE:CCL) will be another one of the top stock picks of 2023. Investors who hold this contrarian view should grab CCL stock before it rebounds and stages a rally for the ages.
After seeming to bottom at $6.11 a share, and briefly flirting with penny stock territory, CCL stock has risen to its current level of $8.60 a share. While it remains down 62% in 2022, there is reason for hope. First, Carnival has said that its cruise bookings for the second half of 2022 are now ahead of 2019 pre-pandemic levels, which is positive. Second, the company is no longer burning through more than $500 million of cash each month. And third, Carnival’s long-term debt load of $28.52 billion is looking more manageable.
AMC Entertainment (AMC)
AMC Entertainment (NYSE:AMC) is more than a meme stock. It’s a legitimate business that operates the largest chain or movie theatres in the world, with more than 10,000 screens worldwide. Also, going to the movies isn’t dead as most analysts seem to think. People still love getting off their comfortable sofas and going out to the movies. Especially when there’s a blockbuster film to be seen such as Top Gun: Maverick or Avatar: The Way of Water. Spending $100 or more to see these theatrical spectacles on the big screen is part of the experience.
And while AMC stock has plunged 83% over the past year and now trades at just five bucks, it is likely that the share price will recover along with ticket receipts in the coming year. Looking ahead, 2023 is shaping up to be a big one on the blockbuster film front. New Indiana Jones and Mission Impossible movies are slated for release. If those don’t get people out to the cineplex, what will? People will get tired of streaming. Eventually.
Meta Platforms (META)
Contrary to popular opinion, Mark Zuckerberg is a genius. He started Facebook from his Harvard dorm room, and look how that worked out for all of us. Now, he’s doing it again by building the virtual realm known as the metaverse. Not only has the CEO thrown more than $10 billion into developing the virtual universe, but he has also rebranded the company from Facebook to Meta Platforms (NASDAQ:META).
Sure, investors and analysts have been pounding the table that Zuckerberg and Co. should cut the billions in losses and return their focus to generating ad revenue on Facebook and other social media platforms. But those people lack vision. And their pessimism is dragging down META stock. It’s negativity that has pulled the company’s share price down 65% in 2022 to $116 a share. Investors who have some vision of their own will see this as the mother of all buying opportunities, understanding that it won’t be long until we’re all walking around with VR headsets and co-existing in the metaverse.
Affirm Holdings (AFRM)
While consumer finance experts, market regulators, and politicians act like buy now, pay later is the worst thing ever, referring to it as a “debt trap” and “looming catastrophe,” the reality is that business is booming. Between 2019 and 2021 , the dollar volume of buy now, pay later loans in the U.S. grew to $24 billion from $2 billion, according to the Consumer Financial Protection Bureau. In addition, an Aug. survey by Consumer Reports found that 28% of Americans had used a buy now, pay later service, up from 18% in Jan. of 2021. With that, AFRM is another one of our top stock picks for 2023.
This brings us to Affirm Holdings (NASDAQ:AFRM), one of the biggest players in the buy now, pay later space. With criticism continuing to be leveled at the industry, AFRM stock has plunged 90% in 2022 to trade at $9 a share. This despite the fact that Affirm is Amazon’s exclusive buy now, pay later partner within the U.S. Plus, all the negative nellies need to remember that buy now, pay later is nothing new. In the 1980s, it was called layaway.
Zillow (ZG, Z)
Since peaking in Feb. 2021 at $202 a share, Zillow (NASDAQ:ZG, Z) fell about 84% to just $32. The (short-term) slowdown in the national real estate market is mostly to blame for Zillow’s reversal of fortune. With the average mortgage rate in the U.S. now above 6%, many would-be homebuyers have been pushed to the sidelines. This has led to the number of U.S. housing starts and building permits falling for several consecutive months. Home prices are also down and forecast to fall further in 2023. While none of this is good for Zillow and the houses it sells online, the current downturn is setting ZG stock up for a run higher at the first sign that the housing market is back on track. Interestingly, Zillow is another favorite stock of Cathie Wood. So there’s that too.
Disclosure: On the date of publication, Joel Baglole 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.