Piggybacking on the picks of great investors and money managers can often lead to big rewards -- especially when the stocks in question are beaten down. If Buffett's buying railroads, perhaps you should look there, too. Does Bill Miller think financial stocks are beaten down? Maybe investigating closely will help improve your own results.

Over on Motley Fool CAPS, our top-rated All-Star players represent the best 20% of our more than 100,000 professional and novice investors. I'm looking among them for those who've chosen one- and two-star stocks to outperform the market. Most CAPS investors might consider them loser stocks, but if our ace contrarians think otherwise, these picks might be worth a look.

Here are a few stocks that have gotten the nod from the cream of our CAPS investors:

Company

CAPS Rating
 (5 max)

1-Year Return

CAPS All-Star

Player Rating

Corporate Office Properties Trust

*

(8.4%)

AIGenesis

98.89

Capital One Financial (NYSE: COF)

*

(29.1%)

phi16

99.60

Medis Technologies (Nasdaq: MDTL)

*

(29.4%)

excel86

99.57

Circuit City (NYSE: CC)

*

(66.3%)

kuvholt2

94.48

DR Horton (NYSE: DHI)

*

(29.9%)

cluelessmorgan

98.75

Usually, a low-rated stock that has also enjoyed a large one-year run-up in its stock price will leave me leery. Sure, stocks can continue to run, but the high valuations -- and low ratings -- of these picks leave me cold. Not so this week -- all the companies have suffered appreciable declines in their stock prices.

Block-busted
It sure has the look of a desperation maneuver. Movie rental chain Blockbuster (NYSE: BBI) is reeling from the assault on its business model by online distributor Netflix (Nasdaq: NFLX) and low-priced, discount retailers, so it throws up a Hail Mary pass to acquire ailing electronics store Circuit City.

While it has the backing of fairly savvy investor Carl Icahn, it makes you wonder how two failing businesses will be better off as one, let alone where Blockbuster will get the financing. It is laden with debt, and it doesn't have enough cash on hand to purchase the electronics retailer outright. Will someone really give them the money to buy a business that's arguably worse off than they are?

From Circuit City's point of view, it's a rescue from oblivion, if not irrelevance. Best Buy (NYSE: BBY) has simply been stealing all its customers, so even $65 million in cost savings last quarter wasn't enough to offset a 10% drop in same-store sales.

Yet the opportunity to get some return -- any return -- on their investment is undoubtedly bolstering investor sentiment for the electronics retailer. CAPS investor chitownjester, for example, sees it as an asset play that a number of smart investors seem to think might work:

Asset play and takeover target of Icahn and Best Buy. Not sure how the [Best Buy] situation would work out, but smart people see that this thing is way undervalued. I don't care how poorly it has done in the past, how much management sticks, how poor product selection/placement is, etc. It is obvious that all of this will have to change for the company to turnaround, and if it doesn't it will be liquidated. Either way the company is undervalued by the market.

With the probability of the deal going through seeming low, some investors, like nuf2bdangrus, see Circuit City as a great short opportunity:

rumored takeover is great opportunity to sell if you own, and short if you don't. Might hedge with calls.

It's difficult to see the deal actually happening, and more difficult seeing it succeeding. But not everyone agrees with that, and some smart Fools think there's method to the madness of creating a "convergence of media content and electronic devices."

Finding value under rocks
So there you have it -- five low-rated laggards that have big endorsements from some of the best and brightest investors in the CAPS community, although there are always some who are not so sure. If you want to add your two cents on these or any other companies, sign up to join Motley Fool CAPS, absolutely free.