Credit Suisse's Contrarian Calls On AK Steel, Kellogg's And Others

In an investor research note Tuesday, Credit Suisse analysts outlined several contrarian calls on stocks. Below is a summary of some of their notable calls and rationale.

Outperformers

• AK Steel Holding Corporation AKS: More optimistic on steel prices than the Street's consensus
• Kellogg Company K: Trades at a discount to peers, Credit Suisse sees 7–9 percent EPS growth
• Nationstar Mortgage Holdings Inc NSM: Sees company delivering better-than-expected returns, closing the gap between its market cap and its book value
• United States Steel Corporation X: The Street under-appreciates operational leverage to rising steel sheet prices
• Whole Foods Market, Inc. WFM: Investors buying while comps bottom out and sentiment is low will get all the upside when (if) comp trends start to reverse

Underperformers

• Aon plc Class A Ordinary Shares (UK) AON: Consensus estimates are overly optimistic on margin improvement
• Cisco Systems, Inc. CSCO: Analysts see strong performance in some respects clouding the pressure on margins
• PulteGroup, Inc. PHM: Consensus expectations are too high, likely to have modest growth in relation to peers
• Valmont Industries, Inc. VMI: Top-line recovery and margins overestimated by consensus estimates

Contrarian investors believe crowd behavior in the market can lead to mistaken valuations of certain stocks and seek to capitalize on these mispricings.