10% Yields, Hated Stocks: 2 High-Risk Bets I'm Eyeing For Big Upside

Blue Owl Capital and Conagra Brands both offer 10% yields, but investor sentiment remains poor despite turnaround potential if management executes. OWL trades at 10.4x earnings versus a 24.4x historical average and has 100% fee-related earnings backed by $223B of permanent capital, while CAG trades at 8x earnings amid margin pressure from consumer trade-downs. Analysts expect CAG EPS to stabilize and potentially grow by FY2028, making the article more valuation- and outlook-driven than immediately price-moving.

Analysis

The market is pricing both names as if yield is the entire story, but the bigger signal is duration mismatch. OWL is the cleaner expression because fee-related earnings are contractual and less exposed to a near-term demand shock; if rates stay higher for longer, the platform can keep compounding while the multiple re-rates off the current de-rating discount. The second-order effect is that higher rates may actually widen the gap versus lower-quality yield vehicles, because investors will eventually pay up for cash flows that are recurring rather than merely optically high.

CAG is a slower burn: the core issue is not just consumer trade-down, but whether management can preserve shelf space and price/mix without forcing a destructive promotional reset. If margins stabilize, the stock can work, but the path likely requires several quarters of cleaner scanner data and easier comparisons; until then, dividend support may attract holders but not new capital. Competitively, private-label and value-tier peers benefit first, while premium brands face the most margin leakage as retailers push more aggressive price ladders.

The contrarian read is that both names may already reflect a lot of bad news, but only OWL has a credible catalyst path inside 1-2 quarters. CAG’s turnaround looks more like a FY2027-FY2028 story, which means the equity can stay cheap longer if earnings revisions keep slipping. For OWL, the risk is that a broader risk-off tape or credit spread widening compresses asset-mark price assumptions; for CAG, the tail risk is a prolonged volume-share loss that makes the dividend a trap rather than a floor.

Key Decisions for Investors

• Long OWL on pullbacks over the next 1-3 weeks; target a re-rating toward a mid-teens earnings multiple if fee-related earnings durability stays intact. Risk/reward is favorable because downside is anchored by recurring revenue quality, while upside is a multiple mean reversion trade.
• Avoid initiating a fresh outright long in CAG until there is evidence of margin stabilization for at least 1-2 quarters. The stock can remain cheap for months if promotional intensity and trade-down pressures persist.
• Pair trade: long OWL / short a higher-beta yield proxy with more cyclical earnings sensitivity over a 1-2 quarter horizon. The idea is to own the cleaner cash-flow compounder and hedge broad yield-seeking flows.
• For CAG, consider a small starter position only if the stock sells off into earnings and management signals credible gross margin repair; use a 6-9 month window and treat the dividend as support, not the thesis.
• If owning CAG, prefer call spreads or a limited-risk structure rather than stock, because the catalyst path is slower and revision risk remains negative through the next several print cycles.