Part of being a successful investor is being able to think independently and having strong enough convictions to stick with your ideas. This can be a difficult enough task when you're looking at a stock that the media and analysts generally like -- after all, in the stock market, there's a seller for every buyer -- but it becomes a far thornier proposition when you're looking at a stock that can't seem to find good press or bullish investors anywhere.
Of course, going against popular opinion has also led to great returns for many contrarian investors.
In that spirit, I've headed to the Motley Fool CAPS community to dig up some unloved stocks that have delivered big gains to shareholders over the past month. Our community of investors had given each of these companies a one-star rating -- the lowest possible -- just 30 days ago:
|
Stock |
30-Day Return |
One-Year Return |
Current CAPS Rating (out of 5) |
|---|---|---|---|
|
Medis Technologies |
28.3% |
(13.7%) |
* |
|
The St. Joe Company |
26.9% |
(35.1%) |
* |
|
Raser Technologies |
22.9% |
124.1% |
* |
|
State Street |
11.4% |
26.9% |
* |
|
Salesforce.com |
10.2% |
69.1% |
* |
|
Blockbuster |
9.6% |
(35.5%) |
* |
|
NVR |
8.4% |
(15%) |
* |
Now, I'm not recommending that you run out and buy these stocks! Their low ratings are a big, flashing red light. CAPS players have been pretty adept at picking out good stocks, and even better at pointing out bad stocks to avoid. In fact, an index set up to short the least-liked stocks in CAPS has outperformed more than 99% of all other CAPS players.
In other words, most stocks that are rated with one star in CAPS are likely to underperform. However, CAPS players aren't perfect. They've been overly negative on stocks such as Crocs and DryShips, both of which have delivered seriously impressive returns to their investors. So the question is whether any of the stocks in that table might be one of those undercover rockets.
Do research? You're kidding!
That's right, the best way to figure out whether any of these stocks is worth considering for your portfolio (real or CAPS) is to roll up those sleeves and dig in a bit. What we're looking for here are stocks that have good fundamentals despite their lack of popularity -- a profitable business, good management, and some decent growth prospects.
So how about this group? As much as I love my Blockbuster Total Access subscription, the company has been a bit flummoxed in its war with Netflix
State Street, on the other hand, has caught my eye recently. I looked at the stock in this column a couple of months ago, when it was outperforming on the strength of a good third quarter. The 27% that State Street's stock has gained over the past 12 months may not seem earth-shattering, but it is particularly notable considering the drubbing that other financial-services stocks -- like JPMorgan Chase
State Street hasn't wasn't left completely unscathed by the recent turmoil. On Thursday, the company announced that it would be setting aside $618 million pre-tax to cover legal costs and other charges associated with investments that went sour over the summer. Though the charge was larger than expected, the company padded the announcement with a bullish view of the fourth quarter that put results above The Street's expectations.
Many of the top-rated Wall Street firms in CAPS are also bullish on State Street. Among them are Deutsche Bank and UBS-- both of which rank as CAPS All-Stars.
So what's your take on State Street? Head over to CAPS and let the community of over 79,000 Fools know what you think. While you're there, you can start your research on any of the other stocks listed above -- or any of the 5,300-plus stocks on CAPS.
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