It’s time to take a contrarian angle on the stock market. 

Investors generally like to follow stocks upgraded by one or more analysts in the near term. Contrarians, on the other hand, might buy when the analysts are down or less optimistic about companies.

You can call this a Dogs of the Dow theory, but when analysts start to be pessimistic about a stock, it can be a sign that the price is right.

I scanned the internet for recent downgrades. I’ve found three from Citigroup, RBC Capital Markets, Stifel, and others. All of the stocks are down over the past six months. 

Here’s why you might make a contrarian bet on one or more of them.   

Key Points About This Article:

• LG Display (LPL) is trading as a penny stock for only the second time since its NYSE listing in 2004. 
• CoStar Group (CSGP) took a step backwards in the latest quarter to integrate Homes.com. 
• TFI International (TFII) is experiencing a temporary lull that will pass.
• Sit back and let dividends do the heavy lifting for a simple, steady path to serious wealth creation over time. Grab a free copy of “2 Legendary High-Yield Dividend Stocks” now.

LG Display (LPL)

LG Display (NYSE:LPL) stock is down 7.8% in the six months through Oct. 24. 

In the past day or so, the maker of advanced display technology for TVs, monitors, cellphones, automotive vehicles, etc., has received two downgrades from Wall Street. 

First, Citigroup cut its shares from Buy to Sell, with a 61% cut in its price target, to $5 from $13. JP Morgan analysts downgraded its stock to Neutral from Overweight and cut its target price to $8.68 from $10.85. 

Citigroup cut its rating on the stock because LG Display continues to generate operational losses while facing intense competition as it tries to expand market share through relationships with companies like Apple (NASDAQ:AAPL).   

JPMorgan cut its rating and target price due to increased pricing pressures and slower demand from technology companies for its monitors. 

Twelve analysts cover LG Display’s stock, with seven rating it a Buy with a $4.61 target price, 24% higher than where it’s currently trading. 

The company reported its Q3 2024 results on Oct. 23. On the top line, revenues increased by 2% to 6.82 billion South Korean won ($4.93 billion), while its operating loss was 81 billion won ($58.6 million), down from Q2 2024, and 88% from a loss of 662 billion won ($479 million) a year earlier.   

Importantly, it still consistently generates a quarterly EBITDA profit despite being in the middle of a turnaround effort by management. 

LPL stock hasn’t traded this low since the March 2020 correction. It’s the only time the stock’s traded in penny-stock status (under $5) since it listed in New York in July 2004. 

CoStar Group (CSGP)

CoStar Group (NASDAQ:CSGP) stock is down 19.7% in the past six months.

The real estate services provider reported Q3 2024 results on Oct. 22. Analysts and investors didn’t like what they saw and heard. At least three analysts cut its target price or rating, and the shares opened down 11% on Oct. 23, although they have regained some of the losses. 

RBC Capital Markets downgraded CoStar’s stock to Sector Perform from Outperform while cutting its price target by $13 to $83. The company’s new bookings in the quarter were down 34%.

“Net new bookings is calculated based on the annualized amount of change in the Company’s sales bookings resulting from new subscription-based contracts, changes to existing subscription-based contracts and cancellations of subscription-based contracts for the period reported,” the company’s earnings release stated.

Bookings were down because the sales force was learning about its newest product, Homes.com. These numbers should rebound in the coming quarters, and its revenue was up 11% year over year. It expects an adjusted EBITDA of $210 million at the midpoint of its guidance, which is 5% higher than in 2023.

JPMorgan cut its target price by 9% from $108 to $99. Its rating remains at Overweight. Even with the price cut, its target is 34% higher than its current share price. Needham cut its target price by $7 to $100. However, it, too, is optimistic about CoStar’s future. It rates it a Buy.  

Generally, analysts like CSGP. Of the 14 that cover it, 11 rate it a Buy. 

TFI International (TFII)

TFI International (NYSE:TFII) stock is down 4.1% in the past six months.

The Canadian trucking and logistics company is going through a rough patch at the moment, but its stock has been a winner over the long haul. TFI is up over 318% in the past five years, more than three times the S&P 500.   

Both Stifel and TD Cowen cut their target price for TFII stock. The former reduced it to $142 from $158, while the latter cut their target by $9 to $171. However, while Stifel downgraded TFII stock to Hold from Buy, TD Cowen kept their rating at a Buy.  

Of the 18 analysts covering its stock, 12 rate it a Buy, with no sell ratings, and a target price of $161.50, 20% higher than where it’s currently trading.

While both Stifel and TD Cowen believe there are near-term operational issues with TFI’s business that are affecting its revenue growth and ability to charge higher prices, TD Cowan thinks the company will make a significant acquisition sometime late in 2025 or early 2026 to grow its share of the North American transportation market.

CEO Alain Bedard has grown the business through acquisitions and organic revenue growth. It will continue to take big swings when the opportunities present themselves. 

TFI reported on Oct. 21 that through the third quarter of 2024, the company had made 10 acquisitions in the first nine months of the fiscal year and paid out $945 million, 53% more than in the same period in 2023.

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