Contrarian Trio: Wells Fargo, GE and Facebook

06/30/2015 8:00 am EST


Analyst Alex Eppstein of Schaeffer Investment Research selects stocks based on a combination of fundamental, technical, and contrarian-oriented, sentiment-based metrics. Here, he looks at three mega-cap stocks poised to extend their gains.

General Electric (GE) has tacked on a solid 8.9% year-to-date to trade at $27.52 per share.

Even more impressive, since bottoming at an annual low of $23.41 in mid-January, the stock has shot up 17.6%.

Analysts have been slow to recognize General Electric’s upward trajectory, though, as nearly half still rate the shares a middling hold.

In other words, GE could benefit from a round of upgrades.

Meanwhile, Wells Fargo & Co. (WFC) is fresh off an all-time peak of $58.  Longer-term, the stock has been impressive.

The stock has risen close to 15% since bouncing from a mid-January bottom of $50.42, ushered higher by its 10- and 20-day moving averages.

A capitulation among skeptical analysts could result in tailwinds for Wells Fargo & Co, as half of the firms tracking it have handed out hold or worse ratings.

Similarly, WFC's average 12-month price target of $57.84 is in line with its current perch, suggesting future bullish notes are a distinct possibility.

Finally, Facebook (FB) has just knocked Wal-Mart Stores (WMT) out of the S&P 500 index's 10 biggest companies by market cap.

Getting onto the list is quite a feat for the social network and it's been helped by an impressive performance on the charts.

Facebook has been on a tear, adding 11.5% year-to-date. The stock gained on news of a renewed partnership with Mondelez International (MDLZ) and a bullish note from Deutsche Bank.

Specifically, the brokerage firm said FB's WhatsApp and Messenger apps could generate up to $10 billion in incremental revenue by 2020.

That hasn't stopped options traders from betting against the stock, though.
During the last 10-months, Facebook has racked up a put/call volume ratio of 0.47, higher than two-thirds of comparable readings from the last year.

A capitulation among these naysayers could spell more upside for the outperformer.

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