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3 Unconventional Stock Picks for Savvy Investors Looking for Secret Winners

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These unconventional stock picks could be key to better performance as tech plays take a hit

There’s more than one path to wealth for investors willing to hang on through occasional volatility hailstorms. Undoubtedly, April brought a slight dip that many value-focused investors may have been waiting for. And while there may be better “deals” in the coming weeks and months, I certainly wouldn’t wait around with an overweighed cash position waiting for deeper or more abundant market discounts.

With the stock market booming and busting intraday on Wednesday in response to Fed chairman Jerome Powell’s comments (spoiler alert: he doesn’t see stagflation), bargain hunters may wish to take action with some of the names on their radar that are feeling a bit weighed on following their quarterly earnings reports.

This earnings season hasn’t been kind to every firm. Quarterly misses, or worse, full-year guidance downgrades, have and will probably continue to result in exaggerated (perhaps double-digit percentage) plunges. Many quick reactions may be overdone, making them potentially buyable by investors willing to stand with today’s losers who may rise to become future winners. Here are three unconventional stock picks to consider.

Starbucks (SBUX)

Learnin' From Luckin, Starbucks Stock Heats Up a Strategy

Source: monticello / Shutterstock.com

Starbucks (NASDAQ:SBUX) left a bitter taste in the mouths of SBUX stock investors on Wednesday morning. With the stock tanking around 16% in a day in response to some abysmal second-quarter earnings (and softer guidance), questions linger about what can help bring back the heat to the once-cherished upscale coffee kingpin.

As it stands, SBUX stock is down almost 5% over the past year, making a long-time laggard that can’t quite seem to get things right. Indeed, there was notable weakness across the board for Q2, with global comparable sales dropping 4%. As expected, China’s sales were not in a good spot, as the nation’s economic recovery was rather muted.

However, considerable weakness in the U.S. market was a bit more disappointing. Blame the poor sales performance on unfavorable weather conditions, if you will, but the awful stock chart may suggest some more big changes are needed in upper management. Perhaps it’s time for Howard Schultz to retake the helm.

In any case, I view SBUX stock as being oversold right here. At 19.9 times trailing price-to-earnings (P/E), shares haven’t been this cheap or bountiful (2.6% yield). Perhaps the greatest source of upside is a more abrupt rebound in the Chinese economy.

Estee Lauder (EL)

An Estee Lauder retail store at Elements Shopping Mall in Hong Kong.

Source: Sorbis / Shutterstock.com

Estee Lauder (NYSE:EL), the beauty company behind such brands as MAC Cosmetics and Clinique, had a rather ugly session on Wednesday, with shares dipping more than 13% on the day following the release of its results. Like Starbucks, weakness in China was a sore spot for the firm.

TD Cowen’s Oliver Chen delivered a timely note following the EL stock drop, commenting that he doesn’t expect all that much upside from a recovery in China in the near term, not with the “muted Chinese consumer demand in prestige beauty.” He’s right to stand by his neutral rating. It could take a while before headwinds abate enough to pave the way for an upward trajectory in the stock.

With sales now expected to come 2-3% lower than a year ago, many investors would rather throw in the towel than stick with the name in the face of continued economic challenges. I view EL stock as a superb value play while it’s down almost 66% from its peak. That said, it’s a value play that will take great patience, as China’s economy seems destined for more of a dragged-out recovery than a swift one.

Deere (DE)

Several John Deere vehicles are parked outside of a building.

Source: Jim Lambert / Shutterstock.com

Deere & Company (NYSE:DE) is another unconventional stock that could be key to better results. The popular green agriculture equipment maker has been consolidating for around three years. Though demand for the latest tractors isn’t exactly as booming as it used to be, I would look for the firm to tap into AI innovation to help it spark its next leg higher.

Deere’s next-generation equipment may give farmers enough reason to upgrade, even if they’re not flush with cash. With features such as AI-leveraging See & Spray, Deere’s AI machinery may just be able to pay itself off in the form of cost savings and waste minimization in the long run. Such high-tech features aren’t just innovative; they’re green. That makes Deere quite tempting from an ESG standpoint.

At writing, DE stock goes for 11.29 times trailing P/E; perhaps Deere is one of the most overlooked AI autonomous plays in the market.

On the date of publication, Joey Frenette held Starbucks and Deere shares. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Joey Frenette is a seasoned investment writer specializing in technology and consumer stocks. Contributing to the Motley Fool Canada, TipRanks, and Barchart, Joey excels in spotting mispriced stocks with long-term growth potential in a fast-paced market.

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