Drink In These 5 Top Stocks

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Whether in the corporate lunchroom, your cubicle, or the local watering hole after work, there are regular places we gather to discuss news, sports or -- if you're like us -- stocks. Here at Motley Fool CAPS, we gather around the virtual water cooler daily to rate stocks and delve into their merits as investments.

Our 140,000-strong CAPS community -- where members give the thumbs-up or thumbs-down to some 5,300 stocks -- seeks businesses it thinks will outperform the market. Below, we'll take a look at some of the most popular and talked-about stocks in the CAPS universe, and examine whether you think they'll continue their winning ways.

Stock	CAPS Rating (Out of 5)	No. of Calls	% Outperform Calls
Lennar (NYSE: LEN)	*	1176	34%
Melco Crown Entertainment (Nasdaq: MPEL)	****	1175	95%
Moody's (NYSE: MCO)	**	1174	83%
Terra Industries (NYSE: TRA)	****	1220	96%
Time Warner (NYSE: TWX)	***	1229	84%

A tall drink of water
If you're looking for a fall guy for the mortgage meltdown, the ratings agencies certainly present an easy target. They certainly contributed to the proliferation of mortgage-backed securities, sold by the likes of Bank of America (NYSE: BAC) and Citigroup (NYSE: C). These toxic investment vehicles sliced and diced the riskiest mortgages and spread the subprime contagion around the globe. By assigning robust ratings to them, Moody's, Fitch Ratings, and Standard & Poor's all abdicated their responsibility for delineating the true risks involved.

Yet to lay the full burden at their feet ignores the much larger role the politicians played in causing the housing bubble. Indeed, Congress still hasn't learned; it's allowing the FHA to still underwrite ever-riskier mortgages. Sen. Chris Dodd, another toxic mortgage enabler, is now playing hardball, wanting to increase the liability of the agencies for their ratings.

The hunt for a scapegoat explains why CAPS member Pennystocks2009 thinks Moody's won't rate very highly against the broader market averages:

Politicians are looking for a culprit for the subprime mess. The rating agencies come in handy. MCO could become the Arthur Andersen of the Credit Rating industry.

Not even Warren Buffett seems as confident in the ratings agency anymore, reducing his holdings in Moody's by more than 25% this past quarter. Still, he does continue to control more than 23 million shares.

What are the odds?
With the spigots in Washington fully opened, though, it's not surprising that homebuilders like Lennar have seen their numbers look less ugly. Considering the absolute wreck the industry was last year, beating those much easier comparables will make numbers appear less shabby this time around. Add in an $8,000 homebuyer tax credit to pull sales forward, and this is no time to be buying homebuilder stocks.

Investors remain wary. Highly rated CAPS All-Star member DarthMaul09 says that despite the rosier predictions, the industry remains a house of cards:

A bounce up possibly related to the recent government extension of housing tax break, but this may just add a little more air to the housing bubble and not really correct the underlying problems. With unemployment continuing to rise and the eventual rise in the interest rate, there appear to be too many dangers to be long on the housing industry.

Gather 'round
With so many good opinions about today's top companies, why not grab a pointy paper cup from the dispenser and join us at the Motley Fool CAPS watercooler? Your input can help guide other investors to stocks with bright prospects for growth. 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.

Sign up today for the completely free service, and let us hear what you have to say about the great and almost-great companies that interest you.