2 Long Shot Stocks with Massive Potential

This week, I want to continue to offer some long shots that have the potential for huge payoffs if they work.

Some will. Some will not

Please understand that these companies have the potential for massive gains over the next several years.

They are highly unlikely to make you rich beyond your wildest dreams by next Tuesday.

Owning them will not protect you from the Federal government or keep your banking information from being accessed by the Chinese Central Bank.

But if we have a batting average of 50% and half of the losers survive, we will almost certainly handily beat the S&P 500 over the next three years or so.

So, let’s take a look at these two long shots…

Returns will be increased if you buy on big down days in the market.

Taking small profits using the rationale that you can never go broke taking a profit will lead to underperforming the S&P 500 over the next three years or so.

We are looking to keep score in multiples of the purchase price, not just percentages.

Our first long shot is Sleep Number Corporation (SNBR). In case you live under a rock or watch even less TV than we do, this company makes beds with adjustable firmness numbers that guarantee a good night’s sleep, domestic tranquility, and increased personal productivity.

The mattresses are sold online and in company-owned stores around the United States.

High-end bedding has been a weak market over the past year. Consumers are being cautious and avoiding high-price tag items.

A shocking number of 20–30-year-olds still live at home, so demand for mattresses is below expectations.

Sleep Number is growing market share in a weak market but losing money.

As a result, the stock is down about 50% over the past year.

This is a decent company with good products. When housing improves, so will business for Sleep Number.

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The stock trades at a price-to-sales ratio of just .17.

As long as management does not screw up too badly and the economy does not end up in a deep-lasting depression, it is hard to see how this stock does not give patient-aggressive investors a return of 4-5 times the current price.

Wolverine World Wide Inc. (WWW) is in the shoe business.

I was sure I had never seen a Wolverine brand shoe until I investigated the company and realized they made Sperry, which makes Docksiders.

That was my shoe of choice for decades when I lived on the Chesapeake Bay.

In Annapolis and on Kent Island, Docksiders are acceptable footwear anywhere, up to and including formal events.

Wolverine also makes a lot of other shoes, including Hush Puppies, Keds, Saucony, and several other brands.

The stock has been cut in half recently as earnings have disappointed on weaker-than-expected sales. As a result, the CEO was canned and replaced with a retail veteran who has had success at Under Armour (UA), Gap Inc. (GPS), and Abercrombie & Fitch Co. (ANF).

Plans are in the works to transform the business, dispose of weaker brands, and focus on stronger ones.

A successful turnaround should help the stock price climb by at least three to four times the current price over the next few years.

If Wolverine comes anywhere near analysts’ expectations for 2024 profits, the stock could be a surprise market leader next year.

Long-shot investing can work out very well for a certain type of investor.

You must love risk and volatility and have the ability to make price swings work for you and not against you,

A strong stomach helps.

So does patience and the ability to resist the temptation to cash in too soon.

— Tim Melvin

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Source: Investors Alley

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