Some investors use strategies which focus on buying the least favourite, most knocked about and disliked stocks. This can be described as contrarian investing.
Although generally investors who are in the contrarian camp will focus almost exclusively on this style and philosophy, you don't have to. There's nothing wrong with just allocating a small portion of your portfolio to these types of opportunities.
While casting a wide net over the market will allow for the widest opportunity set to be identified, even if we limit our screen to just the S&P/ASX 200 Index (INDEXASX: XJO), we can still identify a number of out-of-favour ideas. Here are three.
The share price of Transpacific Industries Group Ltd. (ASX: TPI) has sunk over 28% this calendar year with investors still uncomfortable with the firm's turnaround strategy. Despite the market's negativity there are reasons to be positive – the balance sheet's strength is improved and underlying earnings grew in the last financial year.
Leading education provider Navitas Limited (ASX: NVT) has for many years been a 'market darling' amongst growth investors. As often happens, when a high profile growth stock disappoints, investors react savagely. This has been the case for Navitas with the share price plunging nearly 22% in 2014. Navitas still has above average growth opportunities, so investors who are prepared to pay-up for growth may find now an appealing entry point.
Like many of its mining-exposed peer group, Orica Ltd (ASX: ORI), has not had a pleasant 2014, with the share price down 18.6%. As a major supplier of explosives, Orica is facing headwinds. However, the group also has a large chemicals division and murmurings that this could be spun-off could lead investors to re-assess the market value of the company.
Not the only opportunities
Transpacific, Navitas and Orica have all fallen out-of-favour with investors, but arguably their lower share prices more than capture the lower expectations.
