What is contrarian investing?

Contrarian investing is a strategy where investors deliberately go against prevailing market trends by buying assets that are currently out of favor. While most investors are selling or avoiding these companies, contrarians buy them, believing the market has overreacted and that the stocks are undervalued. The approach requires patience and a strong conviction, as it may take time for the market to recognize the potential value in these beaten-down stocks.

Why would anyone invest in "hated" stocks?

Investing in unpopular stocks can offer significant upside potential for several reasons. First, negative sentiment often pushes prices below a company's actual value, creating a bargain. Second, when expectations are extremely low, even modest improvements can trigger substantial price increases. Finally, these stocks often have less downside risk because the bad news is already priced in. However, they do carry higher risk, as their struggles could worsen rather than improve.

What does "Consensus Recommendation" mean?

A Consensus Recommendation represents the overall opinion that Wall Street analysts have about a stock. It combines multiple professional analysts' ratings (such as "Buy," "Hold," or "Sell") into a single score. For the stocks in this portfolio, you might see more "Hold" or "Sell" ratings than usual, reflecting the market's negative sentiment. However, these recommendations can lag behind company developments, which is why contrarian investors sometimes find opportunity in stocks with poor consensus ratings.

What is Market Cap and why does it matter?

Market Cap (Market Capitalization) represents the total value of a company's outstanding shares in the market. It's calculated by multiplying the current share price by the total number of shares. For stocks in the Most Hated Portfolio, Market Cap is important because it shows how much the market currently values these companies—often at levels far below their historical valuations. A severely reduced Market Cap compared to a company's assets, revenues, or past valuation can be a signal of potential undervaluation.

How risky is investing in this portfolio?

This portfolio carries higher than average risk because the included companies are facing serious challenges that have caused most investors to avoid them. While this creates potential opportunity, it also means they could continue to struggle or even fail. These stocks are best used as a smaller, speculative portion of a diversified portfolio rather than core holdings. Never invest money you can't afford to lose in high-risk investments like these, and consider balancing them with more stable investments.

15 handpicked stocks

Most Hated Portfolio

A collection of deeply undervalued stocks that have fallen out of favor with most investors. Our analysts have identified these companies as potential comeback stories with significant upside if they can navigate their current challenges.

Han Tan | Market Analyst

Updated 2 days ago | Published at जून 17