When it comes down to it, it’s better to trust analyst consensus rather than to always go the contrarian route. These experts know what they’re talking about. Contrary to conspiracy theories or random slander on the Internet, Wall Street firms don’t just pick people off the street to represent their brands. That said, no one is perfect, making some sell-rated stocks potentially intriguing buys.
Again, I want to be clear. You don’t want to go all Rambo on every idea that the experts hate. At the same time, it’s inevitable that a few enterprises just slip through the cracks. Otherwise, if analysts had a 100% track record – or anything close to that – our job would be easy. Just bet on whatever the experts like and call it a day.
Further, because analysts tend to influence the market, savvy contrarians can leverage this dynamic to their favor. Suppose everybody’s calling a trade wrong. Well, the subsequent red ink merely implies a discount. On that note, below are sell-rated stocks that really could be acquisitive opportunities.
Southern Copper (SCCO)
Based in Phoenix, Arizona, Southern Copper (NYSE:SCCO) falls under the basic materials space. It engages in mining, exploring, smelting and refining of copper and other minerals. Its main areas of operation are Peru, Mexico, Argentina, Ecuador and Chile. While the underlying metal is vital for the global economy, analysts don’t have much love for SCCO stock.
According to TipRanks, analysts rate shares a consensus moderate sell. This assessment breaks down as one buy, one hold and four sell ratings. Further, the average price target sits at $98.44, implying almost 15% downside risk. Admittedly, the company hasn’t been the most impressive financial performer. In the past year, its average earnings per share was 75 cents, just a penny better than the expected average.
Still, I think it’s too early to pronounce SCCO as “DOA.” After all, analysts believe that in fiscal 2024, EPS could rise almost 39% to $4.31. On the top line, sales might reach $11.43 billion, a lift of 15.5%.
Sure, the economic situation might not be that good under a second Trump administration. However, “The Donald” will be eager to boost national activity. Therefore, SCCO is one of the sell-rated stocks that could swing higher.
CVR Energy (CVI)
Headquartered in Sugar Land, Texas, CVR Energy (NYSE:CVI) falls under the oil and gas refining and marketing industry. With its subsidiaries, CVR engages in downstream petroleum operations. It also specializes in nitrogen fertilizer manufacturing activities. However, due to the disinflationary dynamics in the hydrocarbon space, CVI stock hasn’t performed that well.
Since the start of the year, CVI fell 21%. Interestingly, in the past four quarters, CVR’s average EPS came out to $1.06. This beat the consensus view of 92 cents. However, the company suffered a big hit in Q1 2024, raising concerns for investors. Per TipRanks, analysts rate shares a consensus hold but it’s a tenuous one. The assessment breaks down as one buy, one hold and two sell ratings.
However, it’s possible that CVI ranks among the sell-rated stocks that could rise higher. Yes, experts project that the top line could erode by 14.9% to $7.87 billion. Also, EPS could tank by 79.43% to $1.16. That’s obviously not a good look.
Nevertheless, geopolitical dynamics may threaten global oil supplies, which could reinvigorate CVR Energy. Also, a second Trump term should bolster domestic hydrocarbon enterprises.
Harmony Gold Mining (HMY)
Another player in the basic materials sector, Harmony Gold Mining (NYSE:HMY) specializes in its namesake asset. Based in resource-rich South Africa, Harmony engages in the exploration, extraction and processing of the yellow metal. It also explores for silver, copper, molybdenum and uranium deposits. The latter material is particularly intriguing due to the massive energy consumption of modern technology protocols.
A relevant business, the market is loving HMY stock, sending it up over 58% since the start of the year. Unfortunately, Wall Street analysts aren’t exactly enthralled with the opportunity. Right now, one expert – JPMorgan Chase’s Catherine Cunningham – is covering the idea. However, the market professional’s “sell” rating isn’t encouraging. Neither is the price target of $4.80, which implies more than 50% downside risk.
True, the valuation is tough to swallow. Currently, shares trade hands at 12.16X trailing-year earnings and 1.88X trailing-year sales. In contrast, these metrics sat at 5.7X and 0.33X, respectively, in the past year.
Nevertheless, an inflationary environment – which could be possible under a second Trump term – could lift gold prices. If that happens, gold miners could tag along for the ride. Therefore, HMY is one of the sell-rated stocks to potentially buy.
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 InvestorPlace.com Publishing Guidelines.
