Successful investing requires you to think independently and stick to your convictions. That's hard enough with stocks that are generally popular. After all, in the stock market, there's a seller for every buyer. But it gets even tougher with stocks that can't seem to find good press or bullish investors anywhere. Of course, defying popular opinion has led many contrarian investors to great returns.
In that spirit, I've headed to Motley Fool CAPS to dig up some unloved stocks that have delivered big gains to shareholders over the past month. Our community of investors has put each of these companies on the bottom two rungs of the CAPS rating scale:
|
Stock |
30-Day Return |
One-Year Return |
Current CAPS Rating (5 max) |
|---|---|---|---|
|
World Wrestling Entertainment |
21.5% |
25% |
** |
|
Spectrum Brands |
19% |
(37.2%) |
* |
|
Martha Stewart Living Omnimedia |
17.3% |
(59.5%) |
** |
|
Tenet Healthcare |
16.2% |
(20.3%) |
** |
|
New York Times |
14.5% |
(14.1%) |
* |
|
Daimler |
13% |
23.6% |
* |
|
Advanced Battery Technologies |
10% |
212.5% |
* |
Now, given CAPS' knack for accurately gauging winners and losers, I'm not recommending that you run out and buy these stocks. An index set up to short CAPS' least-liked stocks has outperformed over 97% of all other CAPS players. That said, CAPS players have proved overly negative on some high-performing stocks. Are any of the stocks in the table above the same sort of undercover rockets?
Providing the pep
Spectrum Brands' shareholders appear to have gotten cautiously optimistic recently as the potential for an asset sale seems to be closer on the horizon. Last week Spectrum said it hired a financial advisor to help with potential asset spin-offs, and that it had also entered into a confidentiality and standstill agreement with Harbinger Capital Partners. Harbinger Capital is a fund under Harbert Management -- currently one of Spectrum's largest shareholders.
The asset sale would come none too soon for Spectrum. Since the company (formerly known as Rayovac) combined with United Industries in early 2005, it has muddled along, barely growing sales, stooping under a massive debt burden, and writing off close to $1 billion in goodwill. Over the past two years, the company's operating income has been less than its interest expense, even after backing out the goodwill write-downs. A sale of some of the pieces of the company could help shed some debt, allowing management to focus on righting things in the remaining divisions.
Combing CAPS
Although there are 43 Spectrum bulls on CAPS, the 34 bears have landed the stock its one-star rating. One of CAPS All-Stars, PG49, stuck his neck out on the stock back in late 2006, seeing it as a potential turnaround candidate. Though this is still certainly possible, I tend to agree more with another CAPS All-Star, Prodigy16, who called the stock "simply horrible" and wrote last summer:
Look at their debt! They have 2.66 billion in debt, and a 302 million market cap... [and] they are losing more and more money every year, and taking on more debt -- that my Fools, is a recipe for disaster. Underperform...
So what's your take? Is there good reason to get more bullish on Spectrum right now, or will it continue heading down? Head over to CAPS and let the community of over 86,000 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 5,400-plus stocks on CAPS.
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