Contrarian Shopping List

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." -- Warren Buffett

Out of the quadrillions of quotations quarried from that most loquacious of quotationists, this one holds a special place in the hearts of Foolish investors. Are you looking to "buy low" so as to later "sell high"? If so, your best chance of getting that initial low entry price comes when panicked sellers are unloading their shares at whatever price is on offer.

In today's column, we search the ranks of Wall Street's motivated sellers and note which stocks they're most frantic to unload. Therein may lie the makings of a contrarian investor's shopping list. But don't just take my word for it. Before you decide to go in through Wall Street's out door, check your thinking against the collective intelligence of Motley Fool CAPS investors.

Today's contenders include:

Pardon me, but haven't we met?
Ordinarily in this column, we sift through the rubble of Wall Street's rejected stocks in search of something with a bit of glitter to it -- a diamond in the rough, to use an already oft-overused cliche. Today's list, however, offers no such prospects. On the contrary, just two of the seven stocks listed above get even a grudging three-star rating on CAPS -- equivalent to a Wall Street "hold" rating, or a kiss from your cousin (choose the metaphor you like best). As for the rest, one and all, CAPS players label them unlikely to outperform the broader market.

Lacking a hero to zero in on, I'll instead use today's column to highlight one of those designated underperformers: big-screen display maker Daktronics. If you know the name, that should come as no surprise. For one thing, it's an ex-recommendation of The Motley Fool's flagship stock-picking newsletter, Stock Advisor. (And if you don't mind my saying so, it's not a pick we're particularly proud of having made. Over the 18 months it sat in our portfolio, Daktronics outperformed the S&P 500 by a measly 2% -- far below our standard 42% outperformance.)

For another thing, the stock had a cameo in the Dec. 11 edition of the companion column to this one, "Wall Street's Wish List." If you're unfamiliar with that column, then allow me to introduce you: It serves as a counterpoint to this one. Whereas here we look at stocks that Wall Street is selling, on the off chance there are babies to rescue from the bathwater, in "Wish List," we look at stocks that Wall Street is buying, in case we might want to do likewise.

Long-term buy-and-hold? Meet short-term buy-and-sell.
My point is that the same Daktronics that Wall Street is selling this week numbered among the stocks that Wall Street couldn't get enough of just two months ago. So much for "long-term buy-and-hold," eh? This, my friends, is the kind of short-term trading that put Jim Cramer 15 points in the hole on Daktronics. (By the way, he's bullish on the stock. This week.)

Over on CAPS, just 10 out of 53 All-Star investors have rated Daktronics an underperformer. And interestingly, one of them did so only by accident. Here's muirmm's story:

"Daktronics is an excellent company in a growth industry. I would buy the stock without hesitation. My underperform pick was an accident; I was rating a bunch of stocks underperform, and accidentally hit that box on DAKT as well. Didn't realize it until it had skyrocketed, leaving me with a huge minus score. Now I'm hoping for an eventual big dip in price so I can change my pick to outperform without so much damage."

Before earnings came out a couple of weeks ago, CAPS player Jacks02, too, was practically drooling over Daktronics' "huge backlog and expanding production capacity at a frenzied pace." That said, Jacks02 mused wistfully that "dissapointing [sic] 4th quarter and drop in price would allow a nice entry point for those looking to get in for the long haul."

So it turns out that even though we've got nothing to recommend to you this week, I get to end this column on a happy note after all. Good news for you, muirmm -- Daktronics did indeed "dip," giving you your chance to fix your unfortunate click. And Jacks02? Since reporting those Q4 earnings on Feb. 14, Daktronics stock has gone on sale -- 26% off. Go wild.

For everyone else reading today's column, I'll say that Daktronics gets a huge amount of feedback on CAPS and, as you can see, no small amount of interest from our very best stock pickers, the CAPS All-Stars. Wouldn't you like to join them and see your name go up in hypertext next to a big, fat, high score? Then log on to CAPS now, and tell us whether you think Daktronics can recover from its fourth-quarter slump and go on to beat the market once again.

Motley Fool CAPS: It's fun, it's free, and it just might make you famous.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked 68 out of more than 23,000 raters. The Motley Fool has a disclosure policy.