Out-Of-Favor Industry or Stock

Industry or stock that is currently unpopular with investors. For example, the investing public may be disenchanted with an industry's poor earnings outlook. If interest rates were rising, interest-sensitive stocks such as banks and savings and loans would be out of favor because rising rates might harm these firms' profits. Contrarian investors-those who consciously do the opposite of most other investors-tend to buy out-of-favor stocks because they can be bought cheaply. When the earnings of these stocks pick up, contrarians typically sell the stocks. Out-of-favor stocks tend to have a low Price/Earnings Ratio.