Contrarian investing has many risks. Despite this, some investors love to pick up stocks at 52-week lows. These companies show signs of being neglected by the market or are simply beaten down by bearish sentiment.
Investors sometimes like to find picks that can spring back up from an anticipated catalyst or even a seasonal event like Christmas. Who can blame them? If there are predictable ways to make money, why wouldn’t an investor take advantage of it?
Since we’re looking for stocks that’ll likely do well around Christmas, I’ll focus on companies with higher activity during the season – such as traveling and gift-giving. To come up with my list, I screened companies that fit the following criteria:
- Shipping, Travel, and Consumer Discretionary sectors
- Stocks trading near its 52-week low based on percentage distance
- Buy ratings from analysts
- At least five analysts cover the stock
I then sorted them based on how close the stocks were to their 52-week low and picked the bottom three. Doing so lets me focus on companies beaten by the market but still have promise.
YETI Holdings (YETI)
If you’re like me and love the outdoors, you may have heard of YETI Holdings (NYSE:YETI). The company designs, retails and distributes a variety of outdoor products that fall under three main categories.
- Drinkware – includes its colsters, tumblers and pints
- Coolers & Equipment – offers various types of coolers and water buckets
- Other – comprised of an array of gears and apparel that include a variety of outdoor goods
YETI has previously acquired Mystery Ranch, another premium outdoor brand that offers durable backpacks, bags and accessories. This acquisition will enhance YETI’s offerings for extreme users of load-bearing equipment.
The company ended fiscal year 2023 with strong revenue growth and a significant rise in earnings. Full-year revenue was $1.66 billion, a 3.98% increase from the previous year’s $1.59 billion. Also, basic net income per share reached $1.96, improving 88.46% year-over-year (YOY).
Today, YETI stock trades at attractive levels, with analyst buy ratings and record-high gross margins exceeding 60%. YETI’s 52-week low stock price is $33.88, which is 14.6% below the current share price. So, to pick some unpolished gems, check out YETI before it becomes expensive.
Papa John’s International (PZZA)
One of the biggest household pizza places in the U.S., Papa John’s International (NASDAQ:PZZA) operates its pizza stores and franchises its restaurants and delivery under the Papa John’s name. The company operates in four main segments.
- Company-owned restaurants – for U.S. domestic operations
- International operations – for franchise distributions outside of North America
- North America commissaries – operates its quality centers and dough production and distribution operations
- North American franchising – offers sales and support to its North American franchising operations
The company boasts over 600+ company-owned locations and 5000+ franchised restaurants in more than 50 countries.
Papa John’s Q1 of 2024 reports decreasing revenue across company-owned and franchised restaurants in the U.S. and abroad. Still, some analysts see a potential for a recovery, judging from their buy recommendations.
Chuy’s Holdings (CHUY)
Chuy’s Holdings (NASDAQ:CHUY) is a full-service restaurant in 16 states specializing in Tex-Mex-inspired dishes. The company’s restaurants offer a variety of popular homemade sauces, like Boom-Boom, Hatch Green Chile and Creamy Jalapeno sauces.
Also, patrons will find a full-service bar in all Chuy’s restaurants, where they can enjoy various beverage offerings.
Chuy’s Holdings reported primarily negative numbers in Q1 of 2024. Revenue and net income were down, though the company states that it was due to “unfavorable weather conditions and the timing of Easter.”
However, there’s still some good news. The company is trading 1.57% away from its 52-week low, and CHUY stock even has a consensus buy recommendation from the 10 analysts covering the company.
On the date of publication, Rick Orford 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