In the ever-dynamic stock market, where trending equities often grab headlines, there’s a compelling case for turning to unloved stocks to buy now. As the allure of top performers captures most investors, the market’s subtle changes hint that these overlooked equities might soon have their day.
The Federal Reserve’s this year has tempered the enthusiasm for some of the market’s showstoppers. In this shifting scenario, those stocks previously relegated to the background may be gearing up for their moment in the spotlight. Investing in these unloved stocks to buy now could not only offer substantial upside but also serve as a buffer against pronounced market volatility. When a security is already flying under the radar, its downside risk could be inherently limited. In essence, there’s potentially less chance of significant losses. With this perspective, it’s time to unveil some standout unloved stocks to buy now.
Ollie’s Bargain Outlet (OLLI)
At first glance, Ollie’s Bargain Outlet (NASDAQ:OLLI) doesn’t seem like one of the unloved stocks to buy now. Instead, it appears quite loved. Since the beginning of the year, OLLI gained more than 59% of its equity value and it makes sense. Specializing in discount retail products, Ollie’s offers much-needed relief during a period of stubbornly high inflation.
However, in the past five sessions, OLLI slipped more than 4%. It’s been one of the notable losers in the market recently. Still, investors should be patient. Unlike troubled discount dollar stores like Dollar General (NYSE:DG), Ollie’s has something in its back pocket: rising gross margins. In its most recent quarter ending July 2023, the retailer posted revenue of $515 million, up nearly 14% against the year-ago quarter. As well, gross margin came in at 38.23%, well above the prior year’s 31.74%. Put another way, Ollie’s is shining bright without killing profitability.
Finally, analysts peg OLLI as a moderate buy with an $82.46 forecast, implying nearly 11% upside potential.
Churchill Downs (CHDN)
Another idea that doesn’t immediately strike investors as one of the unloved stocks to buy now, Churchill Downs (NASDAQ:CHDN) instead seems quite popular. Sure, its year-to-date performance of up over 11% isn’t much to write home about. Still, it’s not nothing. In addition, the company may benefit from the revenge travel phenomenon.
As the premiere name in horse racing and other forms of gambling entertainment, Churchill Downs offers an indelible experience. Moreover, the company might also benefit from economic insulation. Let’s face it – the folks going to its racetrack in Louisville, Kentucky aren’t exactly impoverished. So, even with CHDN’s recent hiccup, it should perform well overall. Also, the company prints an impressive three-year revenue growth rate of 12.8%, above 81.23% of its peers. It’s also consistently profitable, no doubt thanks to its wealthy clientele.
Lastly, analysts rate CHDN as a unanimous strong buy. Their average price target clocks in at $146.50, implying over 25% upside potential.
General Motors (GM)
As one of the automotive giants embroiled in the latest United Auto Workers (UAW) strike, I can appreciate why General Motors (NYSE:GM) is one of the most unloved stocks to buy now. Indeed, folks might consider GM to be too reckless of a risk, even for hardened speculators. Until the ugliness fades through an equitable resolution, GM faces significant headwinds.
I’m not going to lie. Those who partake in General Motors should be ready for one heckuva ride – and not necessarily a good one. Looking at Fintel’s screener for options flow – which focuses on big block trades likely made by institutions – it appears traders are heavily hedging their bets. if the smart money isn’t feeling confident, that’s a striking warning sign.
Still, I’m looking at this for the longer term. With GM having an opportunity to distinguish itself in the crowded electric vehicle space, I’m excited about the automaker. In closing, analysts peg GM as a moderate buy with a $50.53 target, implying over 54% upside.
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.