Contrarian Opportunities: 3 Stocks That Could Surprise Analysts to the Upside


  • Put your crosshairs on these stocks that could beat estimates.
  • H&R Block (HRB): H&R Block could rise on the importance of tax filings for gig workers.
  • Enbridge (ENB): Enbridge might cynically benefit from surprising demand for hydrocarbon products.
  • Funko (FNKO): Funko might seem an odd enterprise but it resonates with its key customers.
Stocks That Could Beat Estimates - Contrarian Opportunities: 3 Stocks That Could Surprise Analysts to the Upside

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With the first-quarter earnings cycle in full swing, contrarian investors may want to target stocks that could beat estimates. While there are plenty of companies getting ready to release their results soon, certain enterprises stand poised to outperform others.

That’s an obvious statement. However, what could really set the speculative fuel alight is if underappreciated companies – basically businesses that carry a consensus hold rating among Wall Street analysts – manage to deliver a strong print. That may be considered more impressive than a robust enterprise delivering robust results.

Of course, you’re dealing with a higher-risk profile here. But if you don’t the potential for volatility in exchange for upside, these are the stocks that could beat estimates this week.

H&R Block (HRB)

H&R block storefront in Canada. HRB stock.
Source: TippyTortue / Shutterstock

Tax consultancy services H&R Block (NYSE:HRB) presents an intriguing case for stocks that could beat estimates. Right now, analysts are quite neutral on the idea, rating shares a consensus hold. This breaks down as one buy, one hold and one sell. Further, the average price target comes out to $55, which implies almost 12% upside potential.

Fundamentally, I’m looking at the gig economy to help boost the company’s earnings results. For the fiscal third quarter, analysts are looking for earnings per share of $4.61 on revenue of $2.14 billion. Last year, H&R block posted EPS of $4.20 on sales of $2.09 billion.

Here’s the thing: gig workers (or independent contractors) generally have far more complex tax filing requirements than corporate employees. For tax purposes, gig workers are running their own businesses. For first-time tax preparers (as participants of the gig economy), the task can be a daunting one.

My gut tells me that H&R Block will deliver better-than-expected results. If so, it’s one of the stocks that could beat estimates.

Enbridge (ENB)

Enbridge (ENB) sign on the head Enbridge office in Toronto, Canada.
Source: JHVEPhoto /

A giant in the hydrocarbon industry, Enbridge (NYSE:ENB) is one of the top-tier midstream specialists. It stores and transports a variety of products, including crude oil and natural gas. It’s also involved in the renewable power space, operating wind, solar, geothermal and waste heat recovery facilities. While extraordinarily relevant, analysts only rate shares a consensus hold with a $37.35 price target. That implies less than 2% upside potential.

For the upcoming Q1 earnings print, analysts are looking for EPS of 60 cents on revenue of $8.94 billion. The high-side estimate calls for earnings of 64 cents on sales of $9.03 billion. In the year-ago quarter, Enbridge posted EPS of 64 cents on sales of $12.07 billion.

It’s true that inflation and rising energy costs have clouded the broader hydrocarbon ecosystem. At the same time, the world runs on hydrocarbons. Further, the explosive sales of hybrid vehicles – as opposed to electric vehicles – may actually have helped Enbridge.

Therefore, I wouldn’t be at all surprised if ENB ranks among the stocks that could beat estimates.

Funko (FNKO)

A stack of Funko Pop! boxes from Funko .
Source: Lutsenko_Oleksandr /

Falling under the consumer cyclical industry, Funko (NASDAQ:FNKO) is a pop culture consumer products company. It designs, sources and distributes licensed pop culture products in the U.S., Europe and across the globe. Basically, you might look at it as a toy company for adults. It may sound odd to many of you yet the brand resonates with its core customers.

However, Wall Street doesn’t see it that way, rating FNKO a consensus hold. Analysts respect Funko enough to give it an average price target of $8.63. That implies 29% upside potential. For Q1, covering experts believe the company will post a loss of 29 cents per share on revenue of $220.27 million. In the year-ago quarter, Funko delivered a loss of 49 cents on sales of $251.88 million.

For cyclical enterprises, inflation of course is a killer. However, Funko gets a lot of love from its buyers. As well, we’re talking about reasonably priced items at the end of the day. With a strong jobs print (April numbers aside), people can afford Funko products. It’s one of the stocks that could beat estimates.

On the date of publication, Josh Enomoto 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 Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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