Investors looking for market-beating returns have several strategies that they can use. One strategy is to buy a company that’s out of favor with the market. Ideally, the company is even hated.
As long as that company can survive and the issues surrounding shares are temporary, the stock should trend higher in time. That could include big one-time events, like buying an oil company after a major oil spill.
Today, the top contrarian opportunity is in Boeing (BA). The airline manufacturer has had a series of high-profile issues in recent months. It’s now come out that the company has violated the terms of a non-prosecution agreement from back in 2021.
Chances are Boeing will recover. They may have some management changes in store. They may have to spend more time and money on quality control. But if they do those things, the stock can go from being hated to simply undervalued.
Action to take: Investors may want to buy a small stake in Boeing, as a contrarian play. Bear in mind that the issues involved may take over a year to sort out. And at the moment, shares don’t pay a dividend.
For traders, shares have moved slightly higher off their 52-week lows recently. That may not mean a big rally is likely, but shares could trend modestly higher in the coming weeks.
The July $190 calls, last trading for about $4.75, could see mid-double-digit returns on a short-term bounce higher.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.