While crowd mass can be comforting, venturing out into the wilderness of unconventional investments can also be rewarding. For one thing, investors can enjoy personal satisfaction for a pioneering endeavor. And because few people are so bold, the returns could be better than expected.
Additionally, unconventional investments offer portfolio diversification. As we recently saw with the market falloff – a result of hotter-than-anticipated inflation numbers – putting your eggs in similar baskets could lead to unmitigated red ink in your holdings. Instead, going the oddball direction can be weird enough to protect you from too much exposure to one particular sector.
Finally, certain investments that seem peculiar now could be labeled astute down the line. With economic conditions still fragile in some respects, these are the unconventional investments to target.
Outfront Media (OUT)
Let’s start this discussion of unconventional investments with Outfront Media (NYSE:OUT), perhaps the most oddball entity on this list. One of the largest outdoor advertisement companies, Outfront operates primarily in the U.S. and Canada. If you’ve seen a billboard driving down the freeway or watched one of the adverts on public transportation vehicles, you’re probably familiar with the company’s work.
At first glance, you might be concerned about relevance. People are working from home. And if they’re outside, folks are glued to their smart devices. Therefore, billboards and related advertising media don’t seem to resonate with the modern audience. However, Polaris Market Research has some intriguing data: the global outdoor advertising sector could hit a valuation of $40.49 billion by 2032.
Granted, the domestic market may be a different animal. However, with more companies pushing for in-person collaboration, a return to the old normal could shockingly boost demand. To be fair, only a sole analyst covers OUT and it’s a pensive hold. Still, it wouldn’t be the first time unconventional investments have shook up Wall Street.
Service Corp (SCI)
Confession time: Service Corp (NYSE:SCI) ranks among the unconventional investments because no one really wants to talk about their mortality. I know some morticians on social media push the idea of focusing on the importance of final services. But allow me to be honest – it’s just an icky topic. Still, on a very cynical level, it’s an incredibly relevant market idea.
Basically, the total addressable market for Service Corp is “infinite.” Well, maybe not literally. According to the laws of physics, mass cannot be created nor destroyed. So, at some point, Service will run out of space if it doesn’t expand. But here’s a fun fact for you. Approximately, we have 332 million people in the U.S. and they’re all going to pass away.
Remember, this is physics. Society must do something with the leftover mass after your soul retires (if you believe in that sort of thing). Unsurprisingly, analysts peg shares a unanimous strong buy with a $73.67 price target.
Public Storage (PSA)
As a business, Public Storage (NYSE:PSA) represents a common one. Every household eventually finds value in storage space, even if they never fork over the money to get it. However, PSA and its ilk don’t typically stand among popular investment ideas. Indeed, they would be considered unconventional investments. However, the unique dynamics tied to the Covid-19 aftershock should make PSA very intriguing.
As you know, inflation skyrocketed following the pandemic, with the most conspicuous effect stemming from the housing market. With so many people priced out of real estate – and subsequently rentals – little recourse existed other than to downsize. And that’s where a company like Public Storage could benefit as one of the unconventional investments to consider. It makes the process of downsizing much more palatable.
In addition, you have elements such as baby boomers retiring. They don’t need expansive real estate so they’ll downsize too, storing bulky heirlooms in storage units. Analysts rate PSA a moderate buy, likely based on the forward relevance.
Deere (DE)
An agricultural play, Deere (NYSE:DE) may not get as much love as the industrial equipment manufacturer Caterpillar (NYSE:CAT). So, it might be one of the unconventional investments in that regard. Still, Deere is vitally important. Focused on manufacturing agricultural machinery, heavy equipment and forestry machinery among others, Deere helps keep this nation running.
A pleasant irony is that Deere is unconventional in its embrace of advanced technologies. At the Consumer Electronics Show (CES) in 2022, Deere revealed a fully autonomous tractor ready for large-scale production. Combining traditional tractor machinery with a GPS guidance system and new advanced technologies – including a neural network that can detect obstructions – Deere is not afraid of change.
To be fair, DE is off to a slow start this year. However, in the past five years, it’s up almost 139%. That’s because it never really gave up its post-Covid gains. Analysts peg DE a moderate buy with a $428.11 price target, implying 13% upside potential.
Marcus (MCS)
To be sure, betting on movie theaters doesn’t rank among unconventional investments. Much of the early days of Covid featured speculation on AMC Theatres (NYSE:AMC). However, Marcus (NYSE:MCS) is a relative oddball. Featuring two principal divisions, one of them happens to be as a movie theater operator. However, the main difference here – the reason why MCS is compelling – centers on geography.
According to its website, Marcus Theatres owns 79 locations. They’re located in states such as Illinois, Iowa, Nebraska, Ohio, and Virginia. As well, it features locations in some western-ish states such as Colorado and Texas. Now, why does that matter? As stated earlier, many people found themselves priced out of the housing market. To get a home, you can either downsize or move to a cheaper state.
With remote work still a thing – though that could change – more people may choose to migrate to areas which Marcus serves. Since September of last year, three analysts love this math, rating shares a buy. The most recent price target stands at $19, implying almost 34% growth.
Goodyear Tire (GT)
Many years ago in the financial publication space, I remember pitching Goodyear Tire (NASDAQ:GT) to incredulous laughter. Editors couldn’t believe that I seriously brought up GT stock as a viable equity idea. That provides a small anecdote as to why Goodyear is one of the unconventional investments. Yes, people need tires for their vehicles. But do they need rubber in their portfolio?
To be upfront, GT just tanked, with the underlying enterprise reporting disappointing financial results. While the company beat on earnings, its tire sales fell by about 3.8% last year. Also, management anticipates global tire volume to slip about 2% in the current quarter. Subsequently, GT stock hemorrhaged 15% of equity value.
Although the print didn’t match expectations, Goodyear also anticipates raw material costs to come down on a year-over-year basis. Plus, we should remember that we’re dealing with a permanently relevant idea. Good economy or bad, people need to replace their tires when the time comes. Analysts are looking at the big picture, pegging GT a strong buy with a $17.95 average price target.
EZCorp (EZPW)
When you think about pawn shops, you think about certain reality television programs, not a publicly traded company. But that’s exactly what EZCorp (NASDAQ:EZPW) is, a Nasdaq-listed pawn shop operator based in Austin, Texas. It also holds the distinction as the second-largest pawn shop operator in the U.S., per its public profile.
EZCorp qualifies as one of the unconventional investments because arguably most people regard the underlying business as a novelty retailer. Further, people usually turn to banks or financial technology (fintech) solutions for loans. However, Statista points out that pawn shops enjoy surprisingly robust demand. About 30 million Americans use such establishments to secure loans. In exchange, they offer their personal property as collateral.
Notably, the industry has over $14 billion in revenue. Now, should the economy experience trouble, EZPW stock could cynically benefit. Naturally, financial woes tend to incentivize lending services. Currently, Canaccord Genuity’s Brian McNamara rates shares a “buy” with a $17 target, implying over 63% upside.
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.
