These two hard-hit stocks are poised for a comeback, says fund manager

A fund manager at Baillie Gifford has identified CoStar and Duolingo as two stocks that have faced significant investor pessimism but may offer potential for a comeback. The observation is notable because it comes from a long-term growth investor commenting on companies that have fallen out of favor with the market.

Both companies operate in different sectors — CoStar in commercial real estate data and analytics, and Duolingo in consumer language-learning technology. Their shared characteristic, according to the fund manager, is that negative sentiment has weighed on their share prices even as their underlying businesses continue to develop. That gap between perception and fundamentals is what long-term investors often look for.

For market observers, the takeaway is less about these specific names and more about the broader dynamic: when sentiment turns broadly negative on a stock, the market may be pricing in challenges that are already well known. Whether such pessimism proves overdone depends on factors like revenue durability, competitive positioning, and management execution. Investors should weigh those fundamentals independently rather than relying on any single fund manager's view.