Sleeper stocks that are poised to pop

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Sleeper stocks that are poised to pop

In fantasy sports, a "sleeper pick" is a player who is either unknown or unloved, but has the potential to provide outsized returns for a team. As volatility has ratcheted up on Wall Street in recent weeks, market participants are looking for sleeper picks of their own to help protect and balance their portfolios.

In honor of the NFL season kickoff, CNBC's "Fast Money" traders each picked a beaten-down sleeper stock which could awaken in the coming months.

RiskReversal.com's Dan Nathan chose consumer goods giant Procter & Gamble as his pick. The stock has dropped 25 percent so far this year, and has been hit particularly hard in the recent sell-off. Nathan admitted that he hadn't liked the stock until recently, when valuations became more reasonable.

"I hated it, to be fair, at $90 in January, I hated it at $80 in July, and down at $70…I'm kind of warming up to it here," he said. According to Nathan, the component's dividend yield of 3.88 percent makes it a defensive play "if things start to get rockier in the markets."


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Steve Grasso of Stuart Frankel also chose a Dow stock as his sleeper pick. Grasso said science, technology and chemical company DuPont, which has dropped 35 percent so far this year, could reverse the downward trend of the past few months.

Grasso, who is personally long the stock, said DuPont could rally if activist investor Nelson Peltz "starts sniffing around again" in the name. The head of Trian Fund Management attempted an unsuccessful bid earlier this year to nominate himself and three other supporters to DuPont's board, in a play to break up the company.

Should the investor get involved again, "that's another catalyst to be a buyer," Grasso said.

Shifting outside the realm of Dow stocks, Guy Adami of Private Advisor Group picked CME Group as a sleeper name that could benefit from the heightened volatility of late.

"All the things they trade, the volumes are exploding," Adami said. He added that year-over-year volume on the CME's exchanges, which include the Chicago Mercantile Exchange, New York Mercantile Exchange and CBOT, was up 11 percent in August. "I think that trend continues," Adami said.

Finally, Brian Kelly took a more macro view when considering his sleeper pick. "We could be witnessing right now the popping of the bubble in activist central banking," the head of Brian Kelly Capital said. "If that's the case, you want to buy gold."

Kelly suggested getting exposure to gold using the SPDR Gold Trust, which has dropped 7 percent year-to-date, and is down 12 percent over the past year.

"I think that could do quite well in the next couple months," Kelly said.

By CNBC's Michael Newberg