These three stocks have flown under Wall Street's radar and could be due for a big gain, says Citi

Citi analyst Richard Schlatter highlights three U.S.-listed stocks with low long-crowding and upside potential: Kohl's (long-crowding 14.2%) has surged ~70% YTD and jumped >50% this week after earnings and naming Michael Bender permanent CEO, though the typical analyst holds with a price target implying >20% downside (LSEG). Sunoco (long-crowding 2.9%) is up >8% in 2025 and carries an average buy rating with analysts' targets implying roughly 15% upside. EchoStar (long-crowding 16%) has rallied >200% YTD following news of AT&T’s spectrum-license acquisition; consensus is a hold with about 7.1% upside over 12 months per LSEG.

Analysis

Market structure: Low long-crowding in KSS (14%) and SUN (2.9%) implies idiosyncratic upside if catalysts hold — winners are acquirers, real-estate / asset-light restructurers (KSS) and fuel distributors that can monetize refining/spread tailwinds (SUN); losers are momentum-only holders who chase post-earnings spikes. Competitive dynamics: Kohl's CEO change strengthens takeout/restructuring optionality and could re-price real estate/value-per-share within 1–3 quarters; EchoStar/SATS benefits from spectrum scarcity but faces one-off event risk after a >200% run. Cross-asset: SUN is most commodity-sensitive — a $10/barrel oil move changes refining spreads and SUN’s EBITDA by mid-double-digits annually; elevated equity volatility implies higher option premia, small bond spread compression if M&A heats up, FX impact is immaterial.

Risk assessment: Tail risks include a consumer pullback that lops 10–20% off KSS comps, regulatory reversal or failed AT&T/spectrum clearance that would remove SATS upside, and a sudden oil-price crash cutting SUN margins by >15% within 3 months. Time horizons: expect KSS mean-reversion/profit-taking in days–weeks, SUN outcomes tied to 3–12 month commodity cycles, SATS outcome driven by M&A/news in 30–90 days. Hidden dependencies: KSS valuation relies on land/lease monetization assumptions and buyer appetite; SUN’s upside depends on retail fuel volumes and winter/summer seasonal spreads.

Trade implications: Tactical: establish a 2–3% long KSS position targeting +25% in 1–3 months with a hard stop at -8% from entry or buy a 3-month call spread (strike ~7–12% OTM) to cap downside. Opportunistic: build a 3–4% long SUN core position for 6–12 months targeting +10–15% (analyst PT) and hedge with a small short position in XLE (equal notional) to isolate stock-specific upside. Do not chase SATS cash stock after 200% run — prefer a 1% notional exposure via selling covered calls (30–45 day) or buying a 3-month put for protection if long; avoid long-dated naked exposure.

Contrarian angles: Consensus underestimates takeout/restructuring optionality at KSS — if activist/PE interest resurfaces, upside can exceed current analyst targets rapidly; SATS’ >200% move may underprice follow-on strategic bids, but it’s binary. The market may be over-discounting short-term profit-taking for KSS — a disciplined buy-on-dip approach wins if >$2 of cash/real-estate per share is achievable within 2–4 quarters. Unintended consequence: simultaneous M&A and commodity shocks could create a liquidity squeeze in small-cap retail/energy names, so position sizes must be capped accordingly.

Key Decisions for Investors

• Establish a 2–3% long position in KSS (ticker KSS) targeting +25% in 1–3 months; place a stop-loss at -8% and/or implement a 3-month call spread (buy 1 ATM-to-10% OTM call, sell 1 25% OTM call) to limit downside and cap cost.
• Initiate a 3–4% core long in Sunoco (ticker SUN) for a 6–12 month horizon targeting +10–15% (per consensus PT); hedge sector beta by shorting an equal-dollar amount of XLE to isolate stock-specific catalyst risk, re-evaluate after quarterly fuel margin prints.
• Avoid buying SATS outright at market after the >200% run; if exposure desired, allocate no more than 1% notional via covered-call writing (sell 30–45 day calls) or buy 3-month puts as tail protection (protective put strike ~10% OTM) pending clarity on AT&T/spectrum developments.
• If seeking relative-value, consider a pair trade: long SUN (3%) vs short a weaker refiner (e.g., PBF) equal notional for 3–6 months to exploit idiosyncratic upside in distribution vs refining margin cyclicality; review if Brent moves ±$8 within 30 days.