Contrarian Cash Cows: 3 Stocks Proving the Analysts Wrong for Huge Gains

Stocks to buy

There’s no doubt Wall Street analysts provide investors with valuable information. Their reports offer a detailed overview of a company, a financial model for its future performance, and a price target based on an informed estimate of a company’s fair value. This serves as a useful jumping-off point for further research and investigation and can even hint at contrarian stocks.

However, analyst research is not infallible. For example, well-known investment commentators and pundits such as Jim Cramer and Cathie Wood offer compelling insights but don’t have a track record of 100% accuracy. It’s always useful to take their calls as one piece of evidence for forming a broader opinion of a company or investment theme.

And in particularly fast-moving sectors of the economy, such as technology, the facts on the ground can change quickly.

Consider these three contrarian stocks as analysts were largely sleeping on all three of these firms in 2023. Yet, all three have seen their share prices appreciate at least 50% over the past 12 months and seem set for additional gains throughout the remainder of 2024.

Qualcomm (QCOM)

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Things were looking fairly grim for Qualcomm (NASDAQ:QCOM) in 2023. QCOM stock had fallen more than 40% from its highs at the time. Analysts went on and on about the fall in smartphone sales and slower-than-expected uptake for Qualcomm’s all-important 5G mobile communications technology.

As Qualcomm built its communications empire on the intellectual property for 3G and then 4G, analysts understandably assumed that 5G would be the pivotal factor in Qualcomm’s future performance. However, the company has smartly diversified and is no longer a pure player in the broadband communications industry.

Specifically, Qualcomm has focus on its chip ecosystem, Snapdragon, for running smartphones and tablets. And it was quick to realize that AI would be a key feature in mobile devices. This allowed Qualcomm to roll out the Cloud AI 100 Ultra back in 2023, giving it a competitive offering against Nvidia (NASDAQ:NVDA) in both cloud and enterprise use cases.

QCOM stock has rallied dramatically this year as analysts start to catch up to Qualcomm’s AI story. Yet, the stock still trades for a surprisingly reasonable 22 times forward earnings.

Amphenol (APH)

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Amphenol (NYSE:APH) is another tech company quietly delivering stellar results. APH stock has rallied over 70% in the last 12 months as it provides key components to the technology industry.

Specifically, Amphenol designs, manufactures, and markets electrical, electronic, and fiber optic connectors. These ultimately go into power applications, high-speed, fiber optic, and radio frequency interconnect products among other such use cases.

Thus, Amphenol is a sort of “picks-and-shovels” play for AI, semiconductors and other fast-moving tech products. Regardless of which companies and brands end up having the leading products, they will all need the same sort of electrical and fiber optic connectors that make up the guts of their technology offerings.

While Amphenol is probably not a household name with most investors, its market capitalization recently topped $80 billion. The company is on pace to deliver about $14 billion in revenues this year, and it is continuing to grow the top line at a double-digit clip despite its already considerable size. Recent earnings also easily topped expectations despite its perception among contrarian stocks.

Banco Bilbao Vizcaya Argentaria (BBVA)

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Banco Bilbao Vizcaya Argentaria (NYSE:BBVA) is a Spanish bank more commonly called BBVA.

It’s been the general consensus for at least the past decade that European banks are not worth owning. Since the European financial crisis of the early 2010s, growth on the continent has stagnated. Meanwhile, Europe faces a number of pressing challenges including demographics, high labor and energy costs, migration and stagnating industrial activity.

However, at some point, even moribund sectors like European banks eventually wake up. And BBVA certainly has a spring to its step this year, with shares rising 50% over the past 12 months.

While BBVA’s Spanish market remains standard, BBVA’s operations in countries like Mexico, Argentina and Colombia are showing greater promise. As a result, BBVA stock has already rallied sharply off its lows. Thus, it remains an attractive contrarian bet at less than seven times forward earnings while offering a nearly 6% dividend yield. The company also is repurchasing stock while it remains at deep bargain levels.

On the date of publication, Ian Bezek held a long position in QCOM stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.

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