Contrarian investors have a unique strategy of seeking out opportunities in the market that go against the prevailing trends. While the current bull market may seem daunting for some, Mizuho Securities believes that contrarian investors can still generate extra returns, also known as alpha, by identifying stocks that have fallen out of favor with Wall Street analysts. This approach involves looking at stocks that may be undervalued or overlooked by the broader market, presenting an opportunity for potential growth.
Mizuho Securities recently shared a screen of top stock picks where its analysts’ price targets are 10% or more above the average analyst consensus. Among these picks are companies like Lowe’s, PayPal, and Oracle, each offering a unique investment opportunity for contrarian investors. These stocks have experienced varying degrees of performance in the current market, with some seeing gains and others facing declines, but Mizuho sees potential for growth in each of them.
Home improvement retailer Lowe’s has slipped 2% so far this year, but Mizuho analyst David Bellinger sees a bright future for the company. With a $280 price target implying a 29% potential rally, Bellinger views Lowe’s as well-positioned to benefit from the recovery in home improvement demand. Similarly, PayPal’s valuation is described as “compelling” by analyst Dan Dolev, with a $90 price target representing a 42% upside potential. Dolev highlights PayPal’s Fastlane service as a key driver for future growth, projecting a significant increase in transaction margins over the medium term.
Database management provider Oracle has risen 14% this year, but analyst Siti Panigrahi believes there is still room for growth. With a $160 price target indicating a potential 34% rally, Panigrahi points to Oracle Cloud Infrastructure (OCI) as a catalyst for the company’s future performance. Panigrahi emphasizes Oracle’s competitive positioning in the cloud computing market, highlighting the company’s potential to expand its operating margins significantly by 2026.
Contrarian investors have a unique opportunity to uncover hidden gems in the market by going against the grain and identifying undervalued stocks. While the current bull market may present challenges, Mizuho Securities has identified several stocks with potential for growth, such as Lowe’s, PayPal, and Oracle. By conducting thorough research and analysis, contrarian investors can position themselves to generate alpha and outperform the broader market. As always, it is essential for investors to carefully consider their risk tolerance and investment goals before making any decisions in the market.