Historically, investors tend to be most bullish at or near a market top and most bearish at or near a bottom. Rather than chasing the highest-flying stocks, sometimes the best stocks to buy are the ones everyone else is selling.
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Wall Street legend Warren Buffett once said wise investors are “fearful when others are greedy and greedy when others are fearful.” Investors who want to follow Buffett’s advice should be greedy in buying stocks that other investors are selling.
Here are seven contrarian stocks to buy, according to Morningstar analysts, that are down at least 50% in the past year:
| Stock | Implied upside over June 1 closing price |
| Warner Bros. Discovery Inc. (ticker: WBD) | 164.3% |
| Snap Inc. (SNAP) | 54.9% |
| Paramount Global (PARA) | 127.4% |
| Match Group Inc. (MTCH) | 84.1% |
| Boston Properties Inc. (BXP) | 103.9% |
| VF Corp. (VFC) | 252.5% |
| Catalent Inc. (CTLT) | 75.7% |
Warner Bros. Discovery Inc. (WBD)
Warner Bros. Discovery is a global entertainment company formed by the 2022 merger of Discovery programming content with WarnerMedia’s entertainment, sports and news businesses. The stock began trading at $24.08 on its first day of trading in April 2022, but it has since lost more than half its value. Analyst Neil Macker says Warner Bros. Discovery has tremendous scale advantages and a large, valuable library of content. In addition, the company just launched its rebranded Max streaming service, which combines HBO Max and Discovery+. Morningstar has a “buy” rating and $30 fair value estimate for WBD stock, which closed at $11.35 on June 1.
Snap Inc. (SNAP)
Snap is the parent of Snapchat, and the company is a leading mobile-focused social media advertising company. Analyst Ali Mogharabi says Snap’s user growth has been impressive, including 15% daily average user growth in the first quarter. However, prices per ad were down 18% in the quarter, and Snap continues to struggle with monetizing its users. Fortunately, Mogharabi says Snap could follow in the footsteps of Facebook and Instagram parent company Meta Platforms Inc. (META) and improve its on-site conversion rate by the end of 2023. Morningstar has a “buy” rating and $16 fair value estimate for SNAP stock, which closed at $10.33 on June 1.
Paramount Global (PARA)
Paramount Global is a global entertainment company formed from the merger of Viacom and CBS in 2019. The company owns Paramount Pictures TV and movie studios, TV networks such as CBS and Comedy Central, and streaming platforms Paramount+ and Pluto TV. Investing in legacy cable and network TV is a contrarian bet in itself, and Paramount shares are down 52% in the past year through June 1. However, Macker says Paramount+ and Pluto TV will help Paramount carve out a position in the competitive streaming video market. Morningstar has a “buy” rating and $35 fair value estimate for PARA stock, which closed at $15.39 on June 1.
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Match Group Inc. (MTCH)
Match operates several leading online dating platforms, including Match.com, OKCupid, Tinder and Plenty of Fish. Unfortunately, Match posted its second consecutive quarter of negative year-over-year revenue growth in the first quarter, and the stock is down 52% in the past year through June 1. However, Mogharabi says Match’s first quarter was actually more positive than it may seem at first glance. He says Tinder price hikes and continued adoption of Hinge will help return Match to positive revenue growth, especially if Hinge can continue to avoid cannibalizing Tinder’s users. Morningstar has a “buy” rating and $70 fair value estimate for MTCH stock, which closed at $38.02 on June 1.
Boston Properties Inc. (BXP)
Boston Properties is an office real estate investment trust, or REIT, that owns office buildings in Boston, New York City, Los Angeles, San Francisco and Washington, D.C. Office REITs were hit hard during the COVID-19 pandemic, and rising interest rates have weighed on the real estate sector in 2023. BXP stock is down about 56% in the past year through June 1, but analyst Suryansh Sharma says the weakness is a buying opportunity for long-term investors. Sharma says a growing number of companies are requiring remote workers to return to the office. Morningstar has a “buy” rating and $98 fair value estimate for BXP stock, which closed at $48.05 on June 1.
VF Corp. (VFC)
VF Corp. is an apparel wholesaler and owner of popular brands including The North Face, Vans and Timberland. Together, those three brands account for about 80% of VF’s total sales. Analyst David Swartz says Vans has expanded its product appeal outside of active sports to a broader customer base interested in fashion and music. He says Vans’ typical buyer was once a male skateboarder, but 60% of Vans apparel is now purchased by women. Swartz says The North Face will benefit from product innovation and growth in direct-to-customer sales. Morningstar has a “buy” rating and $60 fair value estimate for VFC stock, which closed at $17.02 on June 1.
Catalent Inc. (CTLT)
Catalent specializes in advanced delivery technologies and development solutions for consumer and animal health products and drugs. The company helps customers produce drugs for a range of uses, including clinical trials and commercial sales. Catalent got a big boost during the COVID-19 pandemic when it signed deals to help produce the Moderna Inc. (MRNA) and Johnson & Johnson (JNJ) vaccine candidates. Analyst Rachel Elfman says dramatic fluctuations in COVID-19 revenue have made financial visibility difficult, but she says Catalent shares are attractively valued for risk-tolerant investors. Morningstar has a “buy” rating and $65 fair value estimate for CTLT stock, which closed at $37 on June 1.
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7 Best Contrarian Stocks to Buy originally appeared on usnews.com
Update 06/02/23: This story was published at an earlier date and has been updated with new information.
