As the financial markets demonstrate a current rise, some stocks may have slipped under the radar, unnoticed by investors. These “sleeper” stocks denote a positive turn of events, having rebounded from a low point and are now showing an upward trend. This can be attributed to a range of factors, including robust financial performance, promising forward guidance, share buybacks, and dividend payouts.
Such stocks are currently undergoing reevaluation by analysts during earnings season. Being poised to capitalize on such turnaround stocks before a significant price surge could be the difference between a successful and unsuccessful investment strategy. Fret not, for we have identified three sleeper stocks that have the potential to redefine your February.
Uncovering the Potential of Restaurant Brands International (QSR)
Admittedly, Restaurant Brands International (NYSE:QSR) has impressed with its robust financial performance in the fourth quarter, attributable to the impressive sales of its Burger King and Tim Hortons restaurant chains. The ownership of Popeyes Chicken and Firehouse Subs has certainly worked in favor of the company. The reported earnings per share (EPS) of $0.75 exceeded Wall Street’s expectation of $0.73. Likewise, sales during the October to December period stood at $1.82 billion, surpassing the forecasted $1.81 billion. Total sales marked an 8% increase from the preceding year.
Given such achievements, Tim Hortons noticed a remarkable 8.4% year-over-year growth in same-store sales, outstripping the estimated 4.7%. Meanwhile, Burger King recorded a same-store sales growth of 6.3%, and Popeyes’ same-store sales soared by an impressive 5.5%. The revamped strategies at Burger King, including restaurant remodeling and augmented advertising expenditure, have proven to be a success. Furthermore, the acquisition of Carrols Restaurant Group, Burger King’s largest U.S. franchisee, in a $1 billion deal, has accelerated restaurant renovations. QSR stock has gained 15% over the last 12 months, indicating the possibility of further increases in the future.
Unveiling the Momentum of Caterpillar (CAT)
Caterpillar (NYSE:CAT) is making a significant comeback on investors’ radars. The construction equipment manufacturer witnessed a notable 5% surge in CAT stock post its strong Q4 2023 results. The company reported an EPS of $5.23, surpassing analysts’ expectations of $4.76. Furthermore, the sales total of $17.10 billion was in line with Wall Street forecasts. Known for its iconic yellow and black dump trucks, Caterpillar reported an operating profit margin of 18.9%, a notable improvement from 17% a year prior.
Additionally, the company’s guidance indicates expectations for maintaining the 2024 sales at the previous year’s level and projecting a profit margin of 19% for the year. With the continued strength of the economy and ongoing spending by federal and state governments on infrastructure projects, Caterpillar’s earnings have the potential to exceed expectations for the current year and beyond. Following years of neglect, CAT stock is demonstrating a resurgence, having gained 10% in 2024 and 31% over the past 12 months.
Exploring the Revival of Ford (F)
Ford (NYSE:F) has delivered earnings in Q4 2023 that exceed expectations. This announcement was supplemented by the automaker’s decision to issue a special dividend to its stockholders. Ford declared that it will pay a one-time dividend of $0.18 per share in addition to the regular dividend of $0.15 per share for the first quarter, both payable on March 1. The current dividend yield on Ford’s stock stands at 4.79%, without considering the special payout to stockholders.
Despite a six-week strike in the fall of 2023 by the United Auto Workers (UAW) union, Ford reported an EPS of $0.29 as opposed to the estimated $0.14 on Wall Street. Quarterly revenue amounted to $43.20 billion, surpassing the anticipated $40.12 billion. The sales also demonstrated a 4% rise from the prior year. Investors responded positively to these results and the special dividend, causing F stock to climb 3% year to date.
Revitalized and Resilient
As it stands, these stocks have demonstrated resiliency, as they progressed through adverse conditions, and are now poised to yield considerable returns. Investors who recognize the potential of these stocks may find their portfolios significantly enhanced. Careful consideration of the industry landscape, financial fundamentals, and strategic foresight can ascertain the likely success of investing in these upward trending stocks. These “sleeper” stocks have all the potential to redefine February and inspire investors to think outside the box, capturing unexpected opportunities that can lead to extraordinary results.
*Joel Baglole has been a business journalist for 20 years, working at renowned publications such as The Wall Street Journal, The Washington Post, and Toronto Star, as well as contributing to financial websites like The Motley Fool and Investopedia.