Momentum investors love to back companies with the wind in their sails. Contrarian investors typically pick up the cigar butts 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. When one of our All-Star players -- those whose stock-picking prowess places them in at least the 80th percentile of our community -- sours on a top-rated stock, perhaps we should take notice. Maybe the player has found a chink in that highflier's armor or a question mark in its financial footnotes. Or maybe it's just a hunch. That's why these tables aren't lists of stocks to buy or sell -- just starting points for further research.
Here's a list of stocks that some All-Stars have recently spurned:
|
Company |
CAPS Rating (5 Max) |
1-Year Return |
CAPS All-Star |
|
|---|---|---|---|---|
|
Petroleo Brasileiro |
***** |
140.3% |
99.78 |
|
|
Occidental Petroleum |
***** |
69.7% |
99.16 |
|
|
Amtech Systems |
***** |
57.8% |
98.32 |
|
|
Suncor Energy |
***** |
39.6% |
98.16 |
|
|
NetEase.com |
***** |
12.5% |
97.31 |
Considering that, on average, 97% of all investors rating these companies think they will outperform the market, what might have turned some of CAPS' top players against these otherwise widely admired names?
In the thick of it
The term "oil sands" refers to bituminous sand that has extra-heavy oil trapped inside. Its extreme viscosity makes it an expensive form of oil to extract and use. At lower price levels, it's not advantageous to even try, but now that the price of oil sits above $100 a barrel, oil sands make more economic sense. Canada has one of the world's largest deposits of oil sands. With much of the "cheap oil" already tapped, more expensive forms like the oil-sands variety are becoming attractive, and companies such as Suncor and Oilsands Quest
A huge new project by Suncor Energy has some analysts seeing it as being ahead of the curve, but that could also be the reason some investors think it may underperform the market. Yet even those who have marked it down see Suncor as a good investment over the long term. CAPS All-Star investor TMFBreakerJava writes:
With oil above $100 and the US economy slowing, I am betting on a short term oil top. Longer term, I still think this company is a great buy. The oil sands are critical to any hope of future energy independence for North America. And China and India will continue to grow consumption, though they may pause as US economy turns lower for a quarter or two.
More representative, perhaps, is the bullish view that Ifish4me expressed. This player believes that Suncor is well positioned in the industry to reap the benefits of the demographics that continue to drive oil prices higher:
This company has been around the oilsands for over 30 years. The infrastructure is in place, billions in pipelines and upgraders are being built and the capacity is set to increase 5X. There is less than 1% of resource mined since inception and the local economy /political situation is stable, largest consumer is USA.
As Louis Pasteur once noted, "chance favors the prepared mind." Suncor seems to have prepared itself for this chance and continues to prepare for the future.
Make lemonade from lemons
We've seen the direction in which some investors believe these companies are heading, but Motley Fool CAPS is more than what the pros and All-Stars think. We invite you to add your voice to the debate. Go ahead -- have your say. We're eagerly waiting!
