When investing in the stock market, it pays to be skeptical. In addition to doubting what the analysts tell you, you often have to discount what the companies tell you, too. On Wall Street, going against the grain can reap huge rewards. Like baseball's greatest place hitter, "Wee Willie" Keeler, great contrarian investors such as Benjamin Graham, Warren Buffett, and John Neff "hit 'em where they ain't."
Today, I'm looking at a new breed of contrarian: the Motley Fool CAPS "skeptic." These savvy Fools are willing to see both the upside and downside of a stock. While their opinions tend toward the pessimistic, their top CAPS ratings mean they're right far more often than not. And when they find a stock they actually believe will outperform, perhaps we should take notice.
Here are some recent picks from five Foolish CAPS skeptics:
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Company
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CAPS Rating
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Skeptic
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Player Rating
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Rofin-Sinar Technologies (Nasdaq: RSTI )
|
*****
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madnessmmmrs
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99.94
|
|
Zenith National Insurance (NYSE: ZNT )
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*****
|
tenmiles
|
99.93
|
|
Layne Christensen (Nasdaq: LAYN )
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*****
|
mavericktrading
|
99.72
|
|
Ceradyne (Nasdaq: CRDN )
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*****
|
HonestK
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99.64
|
|
NVIDIA (Nasdaq: NVDA )
|
****
|
tcss007
|
98.69
|
Just as a list of their worst stocks would not be a list of stocks to short, the skeptics' favorites aren't automatic buys. But they do offer an excellent starting place for your own future research.
Green with envy
The manufacturers of the graphics cards that make computer gaming seamless and smooth are heating up more than the games (and computers) themselves. Advanced Micro Devices' (NYSE: AMD ) recently released ATI Radeon 3870 X2 has at least temporarily stolen the title of "fastest graphics card around." But NVIDIA has two new cards coming out to challenge Radeon for supremacy.
Despite AMD's momentary edge in speed, Motley Fool Stock Advisor recommendation NVIDIA remains the reigning champ in the graphics arena, with a 38% market share to Intel's (Nasdaq: INTC ) 34%. AMD comes in a distant third at almost 19%.
More than 2,000 CAPS players have rated the graphics-processor maker, with nearly 96% of them thinking it will outperform the market. Intel, in contrast, has the backing of 91% of its CAPS raters, while AMD has just 79% approval from its raters.
If sales of Nintendo's Wii are any indication, the gaming industry still has plenty of room to run -- even with the prospect of looming economic recession. And as gaming goes, so goes NVIDIA, as CAPS investor valunvesthere notes:
With today's multi-billion dollar industries like PC gaming, gaming PCs, Hollywood/ Walt Disney, foreign film industries, animations, media and etc. utilizing computers for graphics, special effects and stunts that conventional methods can't produce or imitate at cost efficiency. I believe better Graphics Processing Unit(GPU) is the norm and will be the norm for decades to come. With Nvidia supplying the majority of GPU's to U.S.A., Taiwan(R.O.C.), and European graphics card producers. It will be a matter of time when something better than SLI(Scaling Link Interface) and Crossfie come along(with the help of Nvidia). It's also a matter of time when Nvidia will outperform, hopefully in the near future.
Fellow CAPS player ronenm agrees, pointing out that the younger generation has a seemingly greater interest in gaming than in other forms of entertainment: "If there is something I know is that as the generations progress, kids (and adults) like playing home in computer games rather than outside with their friends. NVIDIA is, I believe, the leading manufacturer of graphical processors and will continue on leading this market for the next decade if not forever."
Seeing past the obvious
Skeptics know that just beyond the storm clouds lies a shimmering morning. Conversely, the sun can't shine forever, whatever the crowds may think. What's your forecast? Drop by CAPS and tell us which stocks are your favorite contrarian picks.
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