3 Contrarian Bull Calls for Asymmetric Gains

Stocks to buy
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Wall Street analysts can be highly influential when it comes to investors considering stocks to buy. These analysts’ ratings can move prices in the short term while fundamentals play more into a company’s worth over the long term. Out of all of the stocks to consider, however, investors may want to look at contrarian bull call stocks.

When a given stock falls and you take a bullish position, that’s called a contrarian move. Following an analyst’s contrarian bull call after a stock has lost a significant portion of its value, investors can enjoy asymmetric gains by betting against the market.

The companies in this list represent the cryptocurrency sector, a cybersecurity firm and an electric vehicle (EV) maker, respectively. Right now, they’re all enticing contrarian buys.

Coinbase (COIN)

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According to Finviz, Coinbase (NASDAQ:COIN) faces a heavily bearish short float of 23.82%. COIN stock currently has a consensus “hold” rating as well. However, the company has cut costs, closed its Japan unit and settled some regulatory uncertainties. By the end of 2023, I believe Coinbase can prove its less convinced analysts wrong.

Without much warning, Bitcoin (BTC-USD) has started to stage a rally in 2023. Trading for around $16,500 on Dec. 31, the crypto now trades for around $23,000. This movement is rekindling interest in crypto-related names like COIN stock.

Late last year, FTX’s bankruptcy shocked the crypto industry. As a result, investors sold their shares of crypto platforms and miners as account holders withdrew funds.

To lower costs, Coinbase cut about 20% of its staff on Jan. 10, or 950 people. The company also reaffirmed its adjusted EBITDA loss of $500 million for 2022. Coinbase expects to meet its 2022 subscription and service revenue outlook and its average transaction revenue per user target for the year as well.

COIN is a stock to buy as the company manages near-term uncertainties. By cutting costs while meeting key targets, investors may bet on operating profits expanding from here. Overall, Coinbase is an indirect bet that cryptos will hold their value.

CrowdStrike (CRWD)

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Next up on this list of contrarian bull call stocks is CrowdStrike (NASDAQ:CRWD). Per TipRanks, CRWD stock has a consensus “strong buy” rating and an average consensus price target of roughly $163 as of this writing. That represents upside of more than 50%.

Markets are worried that this cybersecurity firm’s customers may delay the closing of software contracts as they cut costs. Instead of waiting for the quarterly report, however, investors should consider the company’s technological edge.

CEO George Kurtz says Microsoft’s (NASDAQ:MSFT) Defender is not a threat to Crowdstrike’s product and business. Defender is the rival company’s legacy-based, signature-based antivirus product. As Kurtz notes:

“Customers are looking for technologies that work and stop breaches. And in fact, we have a lot of customers that come to us that have been ransomed using Microsoft technologies and they’re buying a next-gen product like CrowdStrike.”

Crowdstrike could post strong growth on the small and medium business side looking forward. Its customers need cybersecurity protection at all times.

Rivian Automotive (RIVN)

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Shares of Rivian Automotive (NASDAQ:RIVN) maintain a “moderate buy” rating on TipRanks. The contrarian nature of this pick centers around markets selling its shares. RIVN stock has lost roughly half of its value since October 2022, falling from the $30 area to about $18 today.

Investor fears rose when rival Tesla (NASDAQ:TSLA) slashed the prices of its EVs by up to $13,000. That move has put pressure on Rivian’s margins, although potential customers may now perceive less glamor value in Tesla.

Many key executives have left Rivian in recent months as well. They include a company leader in engineering and a head of the supply-chain unit. However, this could be part of a positive evolution for Rivian. The firm has already completed development of its EV truck. From here, the company needs marketing staff to promote its EVs and accelerate sales.

In the third quarter, Rivian lost $1.88 per share on revenue of $536 million. The company also expected to produce 25,000 units in 2022 but fell just short. Still, CFO Claire McDonough says Rivian is guiding for lower capital expenditures in the new year. Looking forward, 2023 is poised to be a transition year for the company.

On the date of publication, Chris Lau did not hold (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.

Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get actionable insight to achieve strong investment returns.

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