Though one of the remarkable elements of the new year so far has been the sustained performance of the usual suspects, investors should still consider the potential value of stocks with unexpected gains. These enterprises might not be in the spotlight compared to more popular enterprises on Wall Street. Nevertheless, they may offer significant punch.
You’ve heard that phrase, it’s the quiet ones you’ve got to watch out for? Well, that’s the case with stocks with unexpected gains. They might not immediately strike you as compelling opportunities. Heck, they might even appear like flashes in the pan. Nevertheless, there could be some hidden substance that most other investors don’t appreciate.
If you don’t mind exercising patience while sifting for gold flakes, these are the potential stocks with unexpected gains to consider.
BHP (BHP)
As a metals and mining enterprise, BHP (NYSE:BHP) will always command relevance for its vast product portfolio. However, its uranium mining business could attract the spotlight. It’s already one of the top players on the field.
According to data compiled by Statista, BHP produced about 3.4 million metric tons of uranium in its fiscal year ending June 30, 2023. Notably, this tally represented an increase of over a million metric tons from the previous year.
Such demand is likely going to accelerate. Per CNBC, Kazakh mining company Kazatomprom recently cautioned that it may fall short of production targets through 2025 due to construction delays and “challenges related to the availability of sulfuric acid.” Per the news agency, sulfuric acid is critical in the uranium extraction process.
However, even with this potential (albeit cynical) upside catalyst, BHP lost 11% of equity value in the trailing 52 weeks. I don’t really think the market understands how big of a deal the Kazatomprom situation is. Basically, we can’t push all these zero-emission protocols on society without the energy dense power of nuclear fuel. So, BHP ranks among the stocks with unexpected gains.
Cenovus Energy (CVE)
On the surface, Cenovus Energy (NYSE:CVE) might appear to “deserve” its poor performance. In the trailing one-year period, CVE gave up 18% of equity value. Since the beginning of this year, it’s off to an inauspicious start, losing more than 2%. As an integrated oil and natural gas company, Cenovus has suffered alongside the underlying hydrocarbon market.
It’s not for lack of trying as oil-producing nations have agreed to cut production in a bid to lift prices. Still, a trip to the local gas station shows that these efforts have fallen short. However, I’m a big believer that the hydrocarbon space can make a stunning comeback. For one thing, with economic conditions improving in the U.S., consumption should increase. That should be good news for CVE.
In addition, geopolitical tensions continue to worsen throughout the world. That’s a risk factor that I believe the Street isn’t fully appreciating. That said, analysts seem to understand the deal, pegging CVE a consensus strong buy with a $22.17 price target. We’re talking nearly 37% upside potential, making Cenovus one of the possible stocks with unexpected gains.
Rumble (RUM)
At first blush, Rumble (NASDAQ:RUM) might not seem the most relevant idea if you’re looking for robust upside. As a video-sharing content platform, Rumble aims to provide a censorship-free (and I’m assuming non-woke) ecosystem.
If the company were exclusively targeting deep red states, investors would likely jump aboard. However, with the emerging Generation Z being diverse, educated, and focused on sustainability, going “unwoke” seems risky.
However, there’s also a brewing undercurrent of anger and political radicalization in the U.S. Plus, with the recent political victories of former President Donald Trump, a real possibility exists that “The Donald” could win the White House again. Let’s face it – President Joe Biden isn’t a very popular president. And I’ve got to imagine that the Democrats feel they must support him out of obligation and not necessarily because he’s the best the party has.
Given the clear signals that society and the political machinery is emitting, conservative voices are more prevalent than we might imagine. If that’s the case, yeah, RUM could be one of the stocks with unexpected gains. It might even be the most unexpected idea of the year.
— Josh Enomoto
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Source: Investor Place