5-Star Stocks Leaders Have Soured On

Momentum investors are stock players who get behind companies that have the wind in their sails. Contrarian investors typically pick up the cigar butts that the market has tossed aside. So what do you call investors who turn against winners? Sourpusses? Shorts?

Over on Motley Fool CAPS, we sometimes call them the savviest investors around. Not only does the 60,000-strong investor-intelligence community rate thousands of stocks every day, but the players themselves get rated, too. The best of the lot -- what CAPS calls All-Stars -- consistently outperform their peers over time and are assigned ratings of 80 or greater.

When an All-Star player sours on a top-rated five-star stock, perhaps we should take notice. Maybe they've uncovered the chink in the highflier's armor. It could be they've found a question mark in the company's financial-statement footnotes. Or maybe it's just a hunch. That's why we say these tables are not lists of stocks to buy or sell, but rather starting points for further research. With about 10,000 stocks in the universe to choose from, this list can drastically whittle down that number. Read the investors' pitches for or against a stock, and then dive into the financials.

Here's the list of stocks that the all-stars of the All-Stars -- those with player ratings of 90 or better -- have put the frowny face on.

More than 2,300 investors have rated these stocks. An average of 96% of them are bullish on their prospects, and 98% of the All-Stars also think they'll outperform the market. What might have turned these top players against these otherwise widely admired companies?

All quiet on the bear front
While MiamiStuDog has soured on two of the picks highlighted this week, he's not the only CAPS player to have looked askance at Landec. A few investors have begun marking down the food and agricultural products maker, and only one rater put their skepticism into words back in February. Perhaps it centers on the razor-thin margins its unique produce packaging produces, or the bonuses senior executives paid themselves earlier this year despite an unspectacular corporate performance.

Resources Connection, the other MiamiStuDog downgrade, also hasn't generated any negative written feedback yet. But in contrast to Landec, not as many CAPS investors are bullish on the company. Maybe he's playing the contrarian.

Not nearly m-m-m good
3M doesn't suffer that same fate. While CAPS players have been backing the diversified products manufacturer pretty heavily these days, those who disagree have not been shy about putting their reasons to paper (or electronic paper, as it may be).

For example, coasster thinks the company's products aren't what they used to be and that it deserves a low valuation.

I think that you 3M bulls haven't actually used 3M products lately. There's a good reason 3M is lagging and that's because the company and its products are lagging. 3M and the 3M products aren't what they used to be. The company has been stumbling and until they get the company back in the groove the stock deserves to underperform.

Of course, that elicited a retort from CAPS All-Star Mactalon:

3M is lagging?!?! Last check, 3M still has solid financials, and they still make great tape. :-)

But earlier this year, bnkone felt there were a lot of fundamental reasons behind his downgrade, even in spite of the company's great tape.

This company has over 60% of its business coming from outside the US. While the dollar appears to be gaining in valuation this puts a downward pressure on earnings based in foreign currency. Additionally, the company has spent a great deal of cash for acquisitions which it is poorly structured to manage. This will be a drain on future earnings. Lastly, there has been little organic growth within the company and few products in the pipeline.

It's the little things that matter
It appears, though, that a lot of little things are beginning to add up in 3M's favor. Fool commentator Jack Uldrich just last week pointed to 3M's nanotechnology as a sign that the maker of Post-it Notes is able to see the forest for the trees. It's been trying to extricate itself from the strictures of the Six Sigma philosophy of its prior managers and return to the roots of innovation that made it a world success.

It's not always easy to change the direction of a boat that has been floating stagnant without a wind in its sails. That may be why some CAPS players are looking for this company to underperform the market.

Raise your hand
We've heard both the bull and bear arguments here, but Motley Fool CAPS is more than what some pros think, even if they're All-Stars. It's where we invite you to share your thoughts and insights and add your voice to the debate. Go ahead, have your say. We're eagerly waiting!

3M is a recommendation of Motley Fool Inside Value. Resources Connection is a recommendation of Motley Fool Stock Advisor. You can check out either newsletter with a 30-day free trial.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.