In the depths of the Coronavirus lockdowns, the Australian stock market dived precipitously as most businesses had to live with less direct customer contact, and those which could pivot all of a sudden became very popular and profitable. Kogan.com (KGN) being an online business was a case in point.

This chart with its huge spike graphically shows how Ruslan Kogan’s business loved lockdown customers who were buying online.

Kogan.com Limited (KGN)

However, note how getting back to normal has not helped his profits and share price. At its peak, during the pandemic lockdowns, the share price went to $24.75 but now is $3.80!

In contrast, Event Hospitality really suffered during the lockdowns and was always portrayed as a reopening trade play by the likes of yours truly and other stock market watchers.

This means as life gets back to normal with the reopening of the economy for both businesses and households, this business was bound to bounce back, with its profits and share price.

Event Hospitality and Entertainment Limited (EVT)

Before the pandemic arrived, EVT’s share price was $13.70 but it slumped to $6.30 by March 20. Why? Well, look at what makes up its collection of hospitality and entertainment businesses: “Its cinema brands include Event Cinemas, Birch, Carroll and Coyle, CineStar, Greater Union, GU Film House, Moonlight Cinema, and Sydney State Theatre. Event also owns over 60 hotels worldwide, operating more than 10,000 rooms, under the subsidiaries Atura Hotels, Rydges Hotels & Resorts, QT Hotels & Resorts, and Thredbo Alpine Resort, making it Australia's fourth-largest hotel operator. Revenue is also generated from managing and leasing commercial property.

All of these business groups were clobbered by Covid and so those who believed that one day we would be getting back to normal have made a tidy profit on their investment.

Yesterday’s closing share price was $15.49 and so if you courageously invested in EVT on March 20 you’ve pocketed a nice profit of 146%!

I wrote a story for the Switzer Report yesterday talking about how loser stocks can be winners and EVT is a classic case of a loser, who is now a winner. Crucially, it passed my important rule that investing in losers can work as long as it is a quality company, and EVT fits the bill.

But is it too late to invest in EVT? The expert company analysts who are surveyed by FNArena say there is still upside for this company with a target share price of $17.85, which implies a 15.5% rise is possible, based on their forecasting for the company.

This could be misleading, as only two analysts were surveyed, with Ord Minnett forecasting a 27.63% upside while rivals at Citi only tip a 3.29% rise.

If the Ord Minnett analyst is right, it will be driven by that reappearance of the pre-pandemic, Aussie world of lots of tourists and entertainment chasers going back to bigger spending, which will drive EVT’s profits up and its share price along with it.

So, should we think about giving a current loser stock like Kogan a go with our investing money? Let’s see what the analysts think — one says -17.11%, while the other thinks -9.47%.

Why? Retail spending on goods is expected to fall as we spend more on services, such as holidays. Also, Kogan is not perceived as a quality business. JB Hi-Fi (JBH) is seen as a quality outfit and the average rise tipped for this retailer is 8.8% but Credit Suisse’s expert sees a 22% gain out there, while Citi and Morgans think 14% is possible.

EVT has been helped by the success of hotshot films such as Top Gun: Maverick and Spider-Man: No Way Home.

Revenue has spiked by 43% to $987.8 million, while profit was up 24% to $138 million, with the reopening of the country even more important than the success of popular films.

So, what’s the lesson for making money out of stocks?

First, look for quality losers the market is dumping.

Second, make sure the company is still a quality player in its industry.

Third, be a buyer when others are selling. Warren Buffett said to “be greedy when others are fearful and be fearful when others are greedy”.

Fourth, be patient and wait for the market to view current losers as future winners.

Stock markets rotate into and out of sectors. Right now, they’ve been anti-tech and pro-miners but one day that will change and losers will become winners.

But remember, it has to be a quality company and that’s why EVT has been very rewarding for those who took a punt in March 2020.

Interestingly, not all cinema chains are doing well out of blockbuster movies. The Australian’s Alasdair Belling revealed that The Wall Street Journal on Friday reported that Cineworld, the owner of the second-largest cinema chain in the US, was preparing to file for bankruptcy.

“Its main competitor, AMC, has raised more than $US2.2bn ($3.2bn) in equity to stay afloat.”

EVT is not just in pictures and its diversified portfolio of quality assets including hotels, resorts and other streams of income have mixed in nicely with the reopening trade to create a great business and stock price recovery story.

That’s what I’m still looking for when I monitor the market, but the best time to buy losers is when the market has crashed, bottomed and is on the rise again. That’s a trick that stock market winners have worked out some time ago and with stocks bound to be sliding in coming weeks, it could be buy time for the courageous — but make sure you buy quality!