3 Contrarian Stock Picks to Outsmart Wall Street in 2024


  • Contrarian stocks can be quite profitable because the Street is often far too pessimistic about the outlook of many individual equities.
  • Xpeng (XPEV): A rival’s strong Q4 results and Xpeng’s international expansion plans bode well for XPEV stock. 
  • Luckin (LKNCY): Luckin is gaining many new customers and is growing very rapidly.
  • Plug Power (PLUG): PLUG has shown that it can recruit multiple, new, huge customers and its bottom line is poised to greatly improve next year. 
contrarian stocks - 3 Contrarian Stock Picks to Outsmart Wall Street in 2024

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Many if not most people believe that the Street is nearly omniscient. These individuals contend that the price which the market assigned to a stock correctly reflects its current value and its short and medium-term outlook. But in my experience, that’s often not the case. You can often find large returns by picking contrarian stocks. For example, when the Covid pandemic began in early 2020 stocks plunged, with the Street expecting disaster. By the end of the year however, the market was enjoying one of its greatest rallies ever.

And when it comes to individual contrarian stocks, Intel (NASDAQ:INTC) was being left for dead by most of the Street a year ago, and Super Micro Computer (NASDAQ:SMCI) was seen as nothing special. Over the last year, those names have zoomed higher by 73% and an incredible 750%, respectively. Nor in 2022 did most of the Street see the huge AI boom coming. So it is certainly possible to beat the Street by being a contrarian. Here are three contrarian stocks that are well-positioned to surprise the Street and generate huge profits for investors later this year.

Xpeng (XPEV)

XPeng (XPEV) car logo in Shanghai International Automobile Industry Exhibition
Source: THINK A / Shutterstock.com

Boding well for Xpeng (NASDAQ:XPEV), one of its rivals, Li Auto (NASDAQ:LI), reported extremely strong Q4 2023 results. Specifically, Li’s top line soared 136% versus the same period a year earlier to a very impressive $5.88 billion, while it expects its deliveries to jump 90%-95% this quarter compared with Q1 of 2022. Li’s results and guidance show that worries about the demise of EVs in China are greatly exaggerated.

Xpeng’s EVs feature market-leading driver-assistance systems, and it is going to expand to many more markets. Specifically, the automaker is entering five Middle East and North African countries. And it plans to start selling its EVs in parts of Europe as well. The automaker has already launched alliances with auto dealers in multiple Middle Eastern countries, including the UAE, whose population is quite wealthy. By Q4 2024, the firm’s sales should get a big boost from its overseas expansion.

Despite the firm’s huge opportunities, the shares are changing hands at a very low forward price-sales ratio of just 1.06.

Luckin Coffee (LKNCY)

close up luckin coffee's logo coffee brand in Shanghai, June 2019.
Source: NewsToday / Shutterstock.com

Luckin Coffee (OTCMKTS:LKNCY) recently reported impressive fourth-quarter results. The Chinese coffee delivery service is recruiting an incredible number of new customers in the Asian country. Meanwhile, the popularity of its individual stores is increasing rapidly.

Don’t be scared off by the fact that Luckin’s profits fell last quarter because it offered many discounts. I believe that the firm is using a penetration pricing strategy. The pricing technique is when a firm attempts to increase its market share by attracting new customers who talk positively about the offering. The goal is to have this word of mouth campaign entice future customers away from competitors. After obtaining many additional customers, the firms that use this strategy eventually raise prices while retaining most of the customers that they recruited.

Last quarter, Luckin’s sales jumped 91% year-over-year while its same-store sales growth jumped 13.5%. However, the firm’s operating income fell to 212 million Chinese yuan, about $30 million, from 313 million Chinese yuan in Q4 of 2022. Its average monthly transacting customers last year climbed to 48 million from 21.6 million in the previous year.

I predict that Luckin’s penetration price strategy will ultimately work because the firm is roping in so many new customers while offering popular, innovative drinks.

Plug Power (PLUG)

Person holding smartphone with website of US hydrogen fuel cell company Plug Power Inc. on screen with logo. Focus on center of phone display. Unmodified photo.
Source: T. Schneider / Shutterstock.com

Plug Power (NASDAQ:PLUG) continues to greatly expand its businesses. On Feb. 13, Plug disclosed that Uline had agreed to deploy Plug’s technology at its new facility in Wisconsin.

Under the deal, Uline will deploy the hydrogen firm’s 18,000-gallon hydrogen storage tank and 17 hydrogen dispensers to service four distribution centers. Uline will also purchase an impressive total of 250 forklifts from Plug.

Also noteworthy is that Plug recently introduced a complete hydrogen refueling station on a portable platform. It is being marketed as a way to quickly and easily support fleet vehicle hydrogen refueling. The innovation will enable firms to deploy green hydrogen for their fleets without spending a large amount of capital on building many large fuel structures.

Finally, the firm recently reported that a major U.S. automobile manufacturer had agreed to buy hydrogen infrastructure and fuel cell solutions from Plug for its sprawling, six-mile campus. Despite all of these positive catalysts, the shares are down a huge 33% so far this year and 80% over the past 12 months as the Street focuses on the company’s near-term cash-flow issues.

On the date of publication, Larry Ramer held long positions in PLUG and XPEV and his wife owned a long position in LKNCY. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been SMCI, INTC, and MGM. You can reach him on Stocktwits at @larryramer.

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