If I were to classify my investment style, I would consider myself a contrarian, rather than a value or growth investor.

David Dreman first published Contrarian Investment Strategy: The Psychology of Stock Market Success in 1979. It was one of the first books that got me hooked on investing in the 1980s. The other two: The Intelligent Investor by Benjamin Graham and Peter Lynch’s One Up on Wall Street. These three books showed me that you could make money investing.

“Dreman believed that investors are prone to overreaction, and, under certain well-defined circumstances, overreact predictably and systematically,” Validea’s page about Dreman states.

“They typically overvalue the popular stocks considered the ‘best’, and undervalue those considered the ‘worst’, often going to extremes in these over- and under-valuations.”

Unfortunately, because growth stocks have ruled the roost for most of the past two decades, contrarian investors haven’t fared too well. Eventually, Dreman’s philosophy will deliver the goods.

But I digress.

My commentary today focuses on three profitable companies whose stocks hit new 52-week lows on Tuesday. All of them have the potential to deliver outsized returns over the next 3-5 years for investors who are tolerant enough to stay the course.

Here’s the how and why for each.

Thermo Fisher Scientific (TMO) hit its 24th 52-week low of the past 12 months yesterday.

The maker of scientific instruments’ stock is down 31.3% over this period and is trading at its lowest level since July 2020.

Admittedly, I’m not a big follower of healthcare stocks, but it’s a well-known name in the sector, so I’m curious what’s holding it back.

Analysts like it. Of the 24 covering its stock, 20 rate it a Buy (4.54 out of 5) with a mean target price of $554.46, a level it traded at as recently as February. These same analysts expect it to earn $22.32 a share in 2025 and $24.68 in 2026. Its shares trade at 17.5x and 15.8x these estimates.

Thermo Fisher’s current enterprise value of $175.73 billion is 4.35 times its trailing 12-month (TTM) revenue. Its EV/revenue multiple hasn’t been this low since March 2017.

As stated in its Q1 2025 press release, the company continues to allocate capital efficiently, spending $4.1 billion on acquiring Solventum’s Purification and Filtration business, repurchasing $2 billion of its stock, and increasing its dividend by 10%.

Routinely, it generates between $6 billion and $7 billion in annual free cash flow. Expect it to continue buying back its stock until the next phase of growth kicks in.

Copart (CPRT) hit its 14th 52-week low of the past 12 months yesterday.

The provider of online vehicle auctions for insurance companies, as well as other related businesses such as banks and rental car companies, and individuals, has seen its share price fall by 13% over the past year. However, over the past five years, it has increased by 127%, outperforming the S&P 500 by 37 percentage points.

Copart reported Q3 2025 results on May 22. While they were healthy on both the top and bottom lines, investors were more focused on the real or perceived headwinds caused by tariffs, knocking its stock 21% lower in the weeks since.

Because it trades at a premium — 28.3 times its 2026 earnings per share of $1.70 — investors felt that might be too much to pay for a company that tariffs could hurt. However, Copart management believes that replacement parts, which are more expensive due to tariffs, will lead more insurers to opt for writing off a car in a collision rather than paying the higher costs of repairing it, converting tariffs into a win for them.

Regardless of the tariff situation, analysts still support it, with seven of 12 rating it a Buy (4.00 out of 5), and a median target price of $65, which is well above its current share price, according to MarketWatch.

Copart offers a valuable and essential service to its customers. The need, regardless of AI, persists. That’s a significant reason why it has delivered an annualized return of 21% since its initial public offering in 1994.

It’s a keeper.

Watsco (WSO) hit its 13th 52-week low of the past 12 months yesterday, and Pool Corp (POOL) hit its 9th 52-week low.

I know I said I’d comment on three stocks hitting new 52-week lows. However, both of these companies should be positively affected by climate change, so I included both.

In Watsco’s case, it helps homeowners and businesses stay cool in the summer and warm in the winter by distributing HVAC (heating, ventilation, and air conditioning) equipment, parts and supplies. It is the largest distributor in the Americas.

Pool, as its name implies, distributes pool equipment and supplies from 445 sales centers across North America, Europe, and Australia. It is the world’s largest wholesale distributor of its kind. Its products also help customers stay cool.

Both businesses provide products and services that, although not impossible to live without, are pretty essential. In Watsco’s case, summer in America gets stinking hot. Air conditioning is a must-have, especially for senior citizens. As for Pool, sure, you can let your pool get dirty, but eventually, you’re going to sell your house, and when you do, its products will help make the sales process work like a charm.

Of the two, Pool’s business has more recurring revenue, but Watsco’s high-ticket items make up for this. The former has grown its annual revenue by 9.4% on a compounded basis, compared to 9.9% for the latter.

That said, Pool’s revenues have returned to pre-COVID numbers. In 2022, its revenues hit a record high of $6.18 billion. As of March 31, the TTM revenue was $5.26 billion, approximately the same as in 2021. Meanwhile, Watsco’s revenues have grown from $5.05 billion in 2020 to $7.58 billion as of March 31.

Analysts have mixed feelings about both stocks. I like both of them because climate change isn’t going away. They’re profitable and generating significant cash flow, which allows them to buy back shares during times of weakness, such as the current situation.

It will pass. Don’t pass on WSO and POOL for the long haul.

On the date of publication, Will Ashworth did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com