It pays to be skeptical when you invest. In addition to doubting what theanalysts tell you, you often have to discount what thecompanies 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, a new breed of contrarian investor can be found at Motley Fool CAPS, where these savvy Fools are willing to see both the upside and the downside of a stock. While their often negative opinions peg them as "skeptics," 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 our list of Foolish CAPS skeptics:
Just as a list of their worst stocks would not be a list of stocks to short, these skeptics' favorites aren't automatic buys. But they do offer an excellent starting place for your own research.
Overcaffeinated
Starbucks has its users so addicted to its cups of joe that it made them all jittery when it announced that the supply was going to be cut off and some underperforming coffeehouses would close. Java investors have been coming to grips with the reality that a Starbucks on every corner is no longer a possibility. While I've never liked the taste of Starbucks coffee, as Foolish colleague Alyce Lomax pointed out, the grassroots petitioning that sprang up speaks highly for the future of the Motley Fool Stock Advisor recommendation's brand.
The willingness to make the tough decisions, though, is also earning further loyalty from CAPS member UnitX, who sees Starbucks thriving from stable domestic growth and a strong international flavor. Here's an excerpt
There is nothing really wrong with the brand ... There is still some additional changes that [need] to be addressed to get this company back into form. But once all the changes have taken place, Starbucks will be in a much better position. For now, the international growth will carry this company. When everything is said and done, a consistent domestic growth along with strong international demand will push this stock to new heights. This is a very long term play, one that will pay off handsomely in time.
Record this
This just in: Cable system operator Cablevision will soon fast-forward over DVR maker TiVo (Nasdaq: TIVO), because of a court ruling that allows it to offer consumers "remote storage" of programs. While Time Warner (NYSE: TWX) alleged through its Cartoon Network and CNN cable networks that such storage would essentially be unauthorized reproduction and public performance of its property, it was probably the fear that consumers would fast-forward through inane commercials that spurred the suit. Time Warner, along with other broadcasters, will undoubtedly challenge the ruling, but Cablevision has said it will waste no time rolling out the service.
Stripped down
Retail might not be one of those industries looking like it's in growth mode now, but Wet Seal might be converting investors who see a new management team overcoming the continued drop in same-store sales.
CAPS member lovemeto thinks Wet Seal has the fashion sense to overcome the economic malaise.
[Wet Seal] a silly store you say? I have to say though people who want fashions and style … this place is much cheaper … they have been doing better lately and with the bad economy they might continue.
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. It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. What's your forecast? Drop by CAPS and tell us which stocks are your favorite contrarian picks.
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