If you're like me, your fantasy football team is currently plagued with injuries, and you're relying on your late round sleeper picks to carry the weight. In the spirit of fall and the football season, I've put together three sleeper stocks I think could create some big gains for investors' portfolios.
Chubb
This isn't necessarily a traditional sleeper pick, as Warren Buffett has been buying up shares left and right. That being said, this insurance company isn't getting the same attention from investors as Nvidia or Chewy. This is an interesting play as it has struggled to outperform the S&P 500 over the last five years despite its financial performance.
There are two main reasons to want to get involved with Chubb(NYSE: CB). First, with Buffett now owning over 27 million shares, there's reason to believe he might just end up buying the whole thing. Second, the insurance company has been generating great annual performances, growing sales from $34.2 billion in 2019 to $50 billion last year. The story doesn't end there, as Chubb reported a 17.3% year-over-year increase in its most recent quarterly results.
Analyst estimates are expecting full 2024 earnings results of $21.60 per share. That would give the company a forward P/E ratio of 13.4 times full-year earnings. That's below the five-year historical average of 14.9 times earnings, and given the growth rates that Chubb is achieving, I think it's a fair valuation, even if Buffett stops buying.
Dutch Bros
I recently wrote aboutDutch Bros (NYSE: BROS) in comparison to Starbucks, and see the coffee chain as a solid play based on its financial performance relative to its stock price trends.
This is a stock that has a habit of big surges, followed by declines that dip back below the broader market. I view these dips as opportunities for investors. The stock has recently been weaker since it issued some lower guidance regarding expected store openings this year. I view this as an opportunity, as Dutch Bros has been putting on a fantastic financial performance year to year.
In its most recent quarter alone, the company reported a year-over-year revenue gain of 30%. Forecasts are calling for full-year 2024 revenue to be between $1.215 billion and $1.23 billion, roughly a 27% increase.
The coffee company has also started making profits, which I think will create some extra momentum when combined with the impressive revenue growth. All told, it's already started recovering from the most recent lows, and I view the latest pullback as a buying opportunity.
Boston Beer
Boston Beer (NYSE: SAM) is my long sleeper. The premise here is that all of the acquisitions and mergers carried out by this craft beer king haven't led to long-term results. Stagnant revenue growth might finally force co-founder Jim Koch and the rest of the Boston Beer team to sell the company.
The big problem here is top-line revenue growth. Things are progressively slowing down. The company reported 39.2% growth in 2020, then 18.27% in 2021, then 1.59% in 2022, and a nearly 4% decline in 2023.
So far this year, the stagnation has continued. Through the first two quarters, net revenue was down 0.8%. Depletions fell 2%, with a 3.4% decline in shipments. The craft beer company did make the most out of it, with net income up 32.3% through the first two quarters of the year.
This company started as a craft beer gem, has since faced the tough competition of that business, and tried to use new avenues like Truly Hard Seltzer, and Twisted Tea to grow the business. Overall though, the business has struggled to produce results that should drive the stock price. Despite the stock's wild run in 2021, shares are down 22% over the last five years. With flat top-line growth, I view this as a sleeper buyout opportunity.
Don’t miss this second chance at a potentially lucrative opportunity
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*Stock Advisor returns as of October 7, 2024
David Butler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Boston Beer, Chewy, Nvidia, and Starbucks. The Motley Fool recommends Dutch Bros. The Motley Fool has a disclosure policy.
