The term 'buy when there's blood in the streets' was coined in the 18^th century by Baron Rothchild. The contrarian act, as most investors know, is a preemptive call to load up on shares of downtrodden and badly performing companies that have recently taken a severe beating in the market but present the perfect timing to invest. While some investors automatically avoid underperforming names, the ones willing to take the risk can often receive handsome reward once the company at question executes a turnaround.

Wall Street pros know the system well and are often on the lookout for such opportunities. With this in mind, We'll open up the TipRanks database and take a look at three beaten down stock which those in the know think are ripe for a trend reversal. We used TipRanks’ Stock Screener to get the lowdown, and we also noticed that currently all three boast Strong Buy consensus ratings from the Street. Let’s check them out.

World Wrestling Entertainment (WWE)

Talk about bloody and beaten down stocks leads us nicely into the first name on our list; World Wrestling Entertainment. In contrast to the S&P 500’s record breaking performance last year, WWE lost almost 13% of its share price in 2019. The drop was reflected in WWE’s waning popularity – lower live attendances and TV ratings on top of less streaming subscribers are all worrying trends for the company.

That’s the bad news, then. The good news is that WWE has taken care of TV revenue for the next 5 years. The company’s new US deal for its Raw and SmackDown programs should see it pocket in the region of $500 million annually over the period, which is approximately double what it made in the past year. Furthermore, its NXT brand brings in from Comcast an additional $30 million a year. With more international deals in place, the question is whether the company can turn around the declining figures to ensure its longevity once the current deals expire.

Needham’s Laura Martin thinks WWE has what it takes. The 5-star analyst recently interviewed WWE’s management and came away confident in its prospects. Martin said, “WWE believes it can continue to grow US subs, even in the context of more fragmentation of audiences, suggesting that super-fandom niche OTT service are largely immune from the Streaming Wars between deep-pocketed general entertainment SVOD services. If true, this has positive implications for WWE's pricing power. Also, WWE uses social media and its linear TV air-time to lower its customer acquisition costs for its new OTT subscribers."

Martin, therefore, reiterated her Buy rating on WWE. The 5-star analyst’s price target comes in at $88 and represents potential upside of 40%. (To watch Martin’s track record, click here)

The Street agrees. A unanimous 10 Buy ratings dished out over the last 3 months presents WWE with a Strong Buy consensus rating. The average price target of $81.56 implies possible upside of 30%. (See WWE stock analysis on TipRanks)

Ollie's Bargain Outlet (OLLI)

Ollie's Bargain Outlet stock had quite a ride last year, increasing by over 50% before crashing back down whilst shedding 40% of its value. 2020 hasn’t kicked off all that well either; Ollie’s is down by nearly 18% year-to-date.

The sell-off comes despite a better than expected F3Q19 report. Net sales of $327 million represented an improvement of 15.3% year-over-year and resulted in adjusted (non-GAAP) net income of $26.8 million, an increase of 28% over the same period in the prior year.

Ollie’s has also been expanding opportunistically; last year the company bought 12 Toys R Us locations and leased six others around the country following the former toy giant’s bankruptcy. It also purchased almost $200 million dollars of toys from Toys R Us suppliers’ excess inventory.

So, with Mr. Market being unkind to Ollie’s, should investors stay away? Not according to RBC analyst Scot Ciccarelli.

The 5-star analyst believes the recent sell-off spells opportunity, noting, “We think Ollie’s has one of the best long-term store growth profiles in the Hardlines/Broadlines Retail sector. Further, the company’s stores generate strong cash-on-cash returns of ~60%+, with 4-wall EBITDA of $585,000–600,000 ($630,000 in most recent vintages) on an initial $1 million investment. In addition, its constantly changing/treasure hunt-oriented shopping experience, coupled with its steep clearance-level prices, should help insulate the company against e-commerce cannibalization.”

Accordingly, Ciccarelli reiterated an Outperform rating on Ollie’s, while raising his price target from $69 to $76. The new price target represents possible gains in the shape of 42.5%. (To watch Ciccarelli’s track record, click here)

Based on the consensus breakdown, the majority on the Street also back the discount retailer’s prospects in 2020. 4 Buys and a single hold assigned over the last 3 months amount to a Strong Buy consensus rating. At $72, the average price target presents possible upside of ~36%. (See OLLI stock analysis on TipRanks)

Madrigal Pharmaceuticals Inc (MDGL)

Completing our trio of beaten down stocks is Madrigal Pharmaceuticals, which saw its shares falling nearly 20% in 2019.

In mid-December, the drugmaker's shares responded negatively to the announcement that a few investment funds affiliated with Bay City Capital are heading for the exits. The funds offered 1,200,000 Madrigal shares at $107.85 apiece -- a 9% discount to the previous closing price. In other words, the funds probably had to price the offering at a discount simply to entice investors.

But things aren’t as bad as they may seem, argues Evercore analyst Joshua Schimmer.

Madrigal is one of several companies hoping to bring a therapy for NASH disease (Non-Alcoholic SteatoHepatitis), a fatty liver disease that due to the obesity epidemic has been attracting lots of investment capital in search of a possible treatment. NASH medications are expected to increase into a massive market over the next decade, and as there are currently no NASH-specific drugs available, whoever brings a viable solution to the market will likely be well rewarded.

Madrigal's lead drug candidate is resmetirom (MGL-3196), an orally administered, thyroid hormone receptor (THR) β-selective agonist. The drug is currently in a Phase 3 trial, after showing positive data in the 2 prior trials.

Schimmer thinks “2020 is an execution year” for Madrigal. The 5-star analyst said, “We continue to believe that resmetirom may have a differentiated profile, as a clean, oral therapy… the company’s P2 dataset continues to stack up well to the competition which has seen multiple recent disappointments in the field. We continue to believe that resmetirom (MGL-3196) has a strong chance of success in P3, with results expected in ~2021.”

To this end, Schimmer reiterated an Outperform rating on Madrigal along with a price target of $250. This implies upside potential of a massive 192%. (To watch Schimmer’s track record, click here)

On the Street, Madrigal’s Strong Buy consensus rating breaks down into 6 Buys and 1 Hold. The average price target of $169.67 implies upside potential in the shape of 100% over the next 12 months. (See Madrigal stock analysis on TipRanks)