While buying stocks simply because a certain guru investor owns them is hardly a sound investment thesis, it can be a great way to discover interesting stock ideas.

The bull market continues to rage on, but some top companies have fallen off investors' radar. FedEx (FDX -0.95%), Mohawk Industries (MHK 2.35%), and 3M (MMM -0.28%) have each seen their share prices drop over the last year due to slowing growth. But some bright minds on Wall Street believe these stocks will eventually rebound. Here's why.

An analyst using a tablet computer with computer screens displaying stock charts in the background.

Image source: Getty Images.

FedEx: Positioning for e-commerce growth

FedEx and rival UPS have dominated the shipping industry for a long time. While FedEx stands to benefit from the growth of e-commerce, online shopping has also created some near-term hurdles.

FedEx stock is down 37% over the last two years, with a couple of factors weighing on the shares. Revenue growth has been pressured recently due to a slower global economy. FedEx has also absorbed higher costs with handling ground deliveries in e-commerce, as well as integration expenses following the TNT Express acquisition. On top of all that, FedEx has had to absorb the loss of business from Amazon.com, as the online retail titan takes on more deliveries for Prime members with its own delivery service. 

Recent quarterly earnings results have been disappointing. Management cut its fiscal third-quarter guidance in December, citing "lower-than-expected revenue at each of our transportation segments and higher-than-expected expenses driven by continued mix shift to residential delivery services."

It looks like a bleak picture, but management is adjusting to improve performance. FedEx has implemented seven-day ground delivery and enhanced other areas to improve the handling of e-commerce deliveries. The company experienced record volumes during its peak season, and management believes the profit margin on ground shipments will improve in the short term. 

A few notable value investors believe FedEx will bounce back. In the third quarter, Dodge & Cox, David Katz's Matrix Advisors Value, Bill Nasgovitz's Heartland Select Value, and Olstein Capital Management were adding to their positions. The stock currently trades at a forward price-to-earnings ratio of 12.5 times analysts' earnings estimates. 

FedEx is dealing with major obstacles, but this is one of the global leaders in shipping across ground, air, and freight. The breadth of its capabilities around the world makes FedEx nearly impossible to replace, and that should allow it to stand strong against heightened competition.

E-commerce should be a tailwind for FedEx in the long run. The company is investing in autonomous delivery bots for pickup and deliveries, which would allow FedEx to handle more packages in a specific area and increase efficiency.

All said, with the stock down, this could be a great buying opportunity.

Mohawk Industries: A play on healthy housing activity

Mohawk is the world's leading flooring manufacturer. It has a good reputation for quality. Obviously, a bet on Mohawk is a bet on continued global economic growth and housing activity. However, some of the risk of a downturn in the economy has already been priced into the stock. The reason is that Mohawk has already been experiencing somewhat of a recession in its industry over the last year.

Mohawk has wrestled with a spike in materials costs, higher transportation costs, and challenges in the labor market. The U.S. ceramic market has been soft lately due to slowing global economic growth and excess supply. Management expects the recently imposed 104% tariff on Chinese imports to mitigate the flow of imports and improve the supply-demand balance. The flip side to the tariff is that Mohawk had to take a $65 million write-off last quarter on an investment in a Chinese manufacturer and distributor. 

Understandably, the stock has been hit hard. Slower sales growth and a decline in profits have cut the stock price by half over the last two years, but some of the smartest investment managers see a bargain. In the third quarter, Third Avenue Management, Thomas Gayner at Markel, and Charles Bobrinskoy's Ariel Focus were adding shares to their positions. 

These investors obviously believe Mohawk will bounce back as it has done many times throughout its history. Management is pursuing several initiatives to improve performance, including aligning ceramic production with demand in the U.S. market, realigning the North American carpet business, and optimizing manufacturing for luxury vinyl tile.

It is clear management is not too concerned about any of the recent issues. They are continuing to invest in expanding their product portfolio, ramping up new plants, and investing in expanding their global manufacturing capacity. Great companies keep investing during tough times in order to emerge stronger once the marketplace returns to normal, and Mohawk is doing the same.

The stock looks undervalued on a range of metrics. Like FedEx, this is a contrarian bet, but given Mohawk's long history of navigating similar headwinds, investors could make a good return over the next five years from these lows.

FDX Chart

FDX data by YCharts

3M: The most resourceful company on earth

You might know 3M for its Scotch tape or Post-It products, but it also develops products in the healthcare, energy, electronics, and industrial markets. Through its acquisition of MModal, 3M is involved in the development of artificial intelligence-powered solutions in healthcare, which could be a big growth opportunity.

3M has a competitive advantage built around its proprietary technologies and ability to come up with multiple applications for a single product. Its innovative technologies have led to brand recognition and strong relationships with retailers, wholesalers, and other distributors of its products. 3M's brand awareness and product superiority allows it to sell Scotch tape, for example, at a premium to competing products. 

After delivering solid share price gains through most of the last decade, the stock tumbled 23% over the last two years due to slowing growth. Much of the slowdown can be blamed on the trade war with China, which has spilled over to automotive and electronics. These two markets make up 30% of 3M's business. The company has also battled a multi-year lawsuit over environmental issues. 

Ongoing litigation is a cloud over the company, since analysts don't have a clear idea of what the ultimate cost could be for the company -- and this is a risk to watch. But a few smart people on Wall Street don't think it will have a material effect on 3M's long-term value. Some notable investors were buying shares last quarter, such as Jean-Marie Eveillard's First Eagle U.S. Value fund, Thomas Gayner at Markel, and Lee Ainslie's Maverick Capital. 

While 2019 hasn't gone to plan, management is targeting 8% to 11% annual earnings growth through 2023. The trade war will eventually be resolved, and when it is, that could send 3M shares to new highs. In the meantime, investors can find pleasure in 3M's above-average dividend yield of 3.15%.

A final word

Keep in mind, just because other investors have bought these stocks doesn't mean they will make you money. Sometimes unforeseen circumstances can cause a stock to stay down longer than the brightest minds on Wall Street expect. Value investing is an art, not a science. 

Nonetheless, I believe it is likely that FedEx, Mohawk Industries, and 3M will be more valuable to investors in five years than today.