For contrarians seeking significant upside for the second half of this year, the best sleeper stocks may represent an avenue to explore. According to Cambridge University, a sleeper stock is a publicly traded asset that’s currently not performing well. However, it features the potential to suddenly rise considerably higher.
Obviously, the main risk associated with millionaire-maker sleeper stocks is that they can continue sliding downward. Just because an enterprise prints red ink doesn’t necessarily mean that it will bounce higher. Sometimes, pessimism begets more pessimism. Therefore, you should always conduct your due diligence.
At the same time, the top 7 sleeper stocks on this list can be particularly rewarding because not too many investors are paying attention to them. Frankly, the narrative of most of these enterprises clashes with consensus assumptions. But that’s also why this sector is so exciting.
If you’re willing to exercise patience, these are the high-potential sleeper stocks to consider.
ConocoPhillips (COP)
In my opinion, hydrocarbon energy giant ConocoPhillips (NYSE:COP) symbolizes one of the classic names among the best sleeper stocks. Take a look at the broader political and ideological discussions. Pretty soon, you’ll come away thinking that everyone believes in the electrification of mobility and transportation. If so, companies like ConocoPhillips would appear to be flirting with inevitable obsolescence.
However, what makes COP a powerful enterprise for millionaire maker sleeper stocks is that few appreciate a potential harsh reality: hydrocarbons could be with us for many years, perhaps decades to come. In particular, fossil fuels are hard to quit because of their incredible energy density. Plus, it wouldn’t be too smart for countries to become overly dependent on one energy source. Therefore, the need for diversification should keep ConocoPhillips in business.
As for the top 7 sleeper stocks, COP features a strong buy consensus view among analysts. On average, their price target stands at $132.46, implying upside potential of over 13%.
Match Group (MTCH)
Fundamentally, the Covid-19 crisis didn’t just disrupt the economy. It also imposed a severe social impact. As myriad sources pointed out, the pandemic led to a surge in loneliness. However, the thawing of Covid restrictions – along with fears of the SARS-CoV-2 virus – offers a potential tailwind for Match Group (NASDAQ:MTCH). Basically, people are ready to reconnect with others.
Now, I don’t want to get into all the details – you know what I’m talking about. However, as relevant as MTCH, it still ranks as one of the best sleeper stocks due to its under-the-radar nature. In my view, sectors such as artificial intelligence captured the limelight, leaving little room for competing arenas. But that’s also the underappreciated opportunity we have with Match.
While it might not get much love among retail investors – MTCH slipped over 37% in the trailing year – analysts appreciate Match. Currently, experts peg shares as a consensus moderate buy. Their average price target lands at $54.11, implying over 20% upside potential. If you’re looking for high-potential sleeper stocks, MTCH is worth consideration.
GoPro (GPRO)
Popularizing the action-camera phenomenon, GoPro (NASDAQ:GPRO) is synonymous with dynamic content creation and distribution. You’re just not going to get the intense footage that you can easily generate with a GoPro cam. At the same time, the tricky economic environment hasn’t exactly helped the cause in the consumer discretionary realm. Still, for extreme contrarians, GPRO could be one of the best sleeper stocks to buy.
To be fair, this narrative assumes that the retail revenge phenomenon still runs hot for the rest of this year (and perhaps beyond). Specifically, if people are out and about traveling the world, bringing along a GoPro would make much sense. Plus, with the labor market being so tight, anyone that wants a job can practically get a job. In theory, this backdrop helps GPRO.
Among analysts, GPRO carries a consensus moderate buy view. Interestingly, the average price target is quite elevated at $5.30, implying over 27% upside potential. Should circumstances improve, GPRO could be one of the top sleeper stocks to buy now.
Innovative Industrial Properties (IIPR)
With so much attention paid to the current highflyers like AI, the cannabis industry – which once represented the hottest ticket in town – has fallen by the wayside. That’s the case for Innovative Industrial Properties (NYSE:IIPR). Since the beginning of this year, shares slipped nearly 21%. Over the trailing 365 days, IIPR gave up almost 15% of equity value. Still, it could be one of the best sleeper stocks.
For starters, analysts still appreciate what Innovative Industrial can bring to the table. Presently, experts peg IIPR as a consensus moderate buy, breaking down as two buys, three holds, and no sells. Moreover, the average price target lands at $109.75, implying 41% upside potential. The high side target hits $179, implying 130% growth.
As a provider of financial and business services to the cannabis sector – but not growing the green stuff itself – Innovative offers a far less controversial framework. Also, IIPR trades at 10.19x funds from operations (FFO), lower than 64.73% of its peers. Thus, it’s worth a gander for millionaire maker sleeper stocks.
Scorpio Tankers (STNG)
A tanker shipping firm, it’s not entirely surprising to see Scorpio Tankers (NYSE:STNG) make the list of best sleeper stocks to consider. Undeniably, Scorpio and the underlying industry offer considerable relevance to the global economy. It’s really the lifeblood of international commerce. At the same time, the questionable nature of the consumer economy negatively affected STNG. On a year-to-date basis, shares fell more than 18%.
Still, Scorpio deserves a closer look as one of the top 7 sleeper stocks, according to Wall Street analysts. Right now, STNG carries a consensus strong buy view with the average price target standing at $67.67. This forecast implies that shares can return slightly over 57%. What’s more, among six experts, the worst rating within the past three months is a lone hold view.
To be fair, Scorpio’s ultra-low forward earnings multiple may imply a possible value trap. However, the company commands strong operational stats, such as a three-year revenue growth rate (per-share basis) of 20.3%. As well, its trailing-year net margin impresses at 51.6%. Thus, STNG may be one of the high-potential sleeper stocks.
Sibanye Stillwater (SBSW)
Given the vagaries of the global economy, hedging one’s bet in the precious metals sector may make sense for some. However, South Africa’s Sibanye Stillwater (NYSE:SBSW) doesn’t quite get the love that it arguably deserves, making it one of the best sleeper stocks. To be quite fair, though, Sibanye suffers certain issues such as frequent workers’ strikes. So, I can’t entirely blame the critics.
Nevertheless, those who believe in Sibanye anticipate significant growth ahead. That’s why as a market gamble, I believe SBSW ranks among the top sleeper stocks to buy. Presently, analysts peg SBSW as a consensus moderate buy. Their average price target clocks in at $12.50, implying over 69% upside potential.
Again, Sibanye suffers from significant distractions so investment data aggregator Gurufocus labels shares a possible value trap. However, for speculators, they’ll enjoy an enterprise with a three-year revenue growth rate of 20% and an EBITDA growth rate during the same period of 59%. It’s got its flaws but SBSW could be one of the top sleeper stocks to buy.
NuScale Power (SMR)
Possibly my favorite idea for best sleeper stocks, NuScale Power (NYSE:SMR) brings a fresh take to the nuclear power industry. Specializing in small modular reactors or SMRs, these facilities feature a much smaller physical footprint. Therefore, they can be integrated into areas previously inaccessible to regular-size nuclear power plants. As well, their small size enables a distributed energy network, potentially empowering efforts such as desalination.
Within the past three months, no analyst covers SMR. However, in the past year, four experts covered NuScale, resulting in two buys and two holds. Among the buy ratings, the average price target came out to $16.25. This forecast implies almost 120% upside potential.
Now, before you jump aboard SMR stock, you should be aware of the risks. Since the start of the year, shares slipped nearly 28%. Over the past 365 days, they gave up over 45% of equity value. From a financial perspective, I’m not going to sit around and tell you that no concerns exist. Clearly, they do. However, it’s also fair to point out that NuScale incurs zero debt, affording it significant flexibility.
On the date of publication, Josh Enomoto 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.
