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 |
1-year |
Current |
|---|---|---|---|
|
EMCORE |
24.0% |
63.8% |
** |
|
Six Flags |
16.2% |
(67.7%) |
** |
|
Dell |
14.9% |
(16.9%) |
** |
|
Starbucks |
10.1% |
(37.6%) |
** |
|
FuelCell Energy |
13.1% |
45.6% |
** |
|
Panera Bread |
12.2% |
(8.9%) |
** |
|
VeriSign |
9.1% |
41.5% |
** |
Data provided by Motley Fool CAPS as of May 28.
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 more than 98% of all other CAPS players. That said, CAPS players have been too negative on some high-performing stocks. Are any stocks in the table above similar undercover rockets?
Providing the pep
The recent climbing done by Starbucks was more of a bounceback from its extended slide than a reaction to good news. After pre-announcing lower earnings for its fiscal second quarter and 2008, the coffee brewer poured a steamy cup of ho-hum when it announced full results. After having more pep than a triple shot for a number of years, Starbucks has been stumbling lately, and its stock has reflected that with a drop of more than 50% from its highs in 2006.
The recent uptick may suggest that investors are starting to sniff around the wreckage. At 22 times 2008 earnings expectations, the stock isn't cheap, but it's cheaper than it's been in a long, long time. The return of Howard Schultz also has many thinking that rejuvenation is on the way, and that the stock is worth buying again.
And if Schultz doesn't work magic, investors can probably expect to hear from activist investor Nelson Peltz, who put some zip in the stock when his investment fund disclosed earlier this month that it had started a position in Starbucks.
Combing CAPS
Although there are more than 5,000 Starbucks bulls on CAPS, there are nearly 1,200 who think the stock will underperform the S&P 500. CAPS All-Star freemoney101 summed up the bearish position last month: "How long will people pay $4 dollars for coffee? My guess is not much longer."
The bulls haven't been silent, though, and fellow CAPS All-Star DerektheDude gave his thumbs-up in early April:
[Starbucks has been] beaten-up on a horrible economy and rumblings of a too-quick/too-much domestic expansion. I agree, Starbucks tried to conquer the mountain way too fast and reality caught up with them. If you're patient, I'm almost certain SBUX will see $27.00-ish or above within a year or so. The question really is: do you have the patience to hold tight and watch them crawl back up there?? Well, do ya?
So what's your take? Is there good reason to get more bullish on Starbucks right now, or are its whipped-cream days numbered? Head over to CAPS and let the community of 105,000 Fools know what you think. While you're there you can start your research on the other stocks listed above or the 5,500-plus stocks on CAPS.
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