Stocks That Swayed the Skeptics

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. Investors such as Buffett, Graham, and Neff abhor the "wisdom of crowds."

Today's new breed of contrarian investor can be found at Motley Fool CAPS, where these savvy Fools are willing to see both the upside and 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, this list of the skeptics' favorites isn't automatic buys. But they do offer an excellent starting place for your own research of extreme buying opportunities.

Inquiring minds want to know
When Sprint Nextel (NYSE: S) introduced the 4G HTC Evo phone, it was lauded as giving it a huge head start on Verizon (NYSE: VZ) and AT&T, neither of which will begin rolling out their own 4G networks until later this year and early next year. However, a shortage of touchscreen panels made by Samsung is causing delays in getting the phone into consumers' hands, meaning the big lead Sprint could have had will be greatly diminished.

The 4G network rollout, though, is coming, and that means microwave backhaul shops DragonWave and Ceragon Networks (Nasdaq: CRNT) ought to find plenty of business. Yet it looks like the fears that DragonWave would be losing contracts from Clearwire have come true as the percentage of revenues it contributes -- typically running near 80% -- will now amount to just 25% of the total. I'm not sure it's just contract lumpy-itis.

That doesn't mean it's not a value at these prices, just that DragonWave investors might need to prove it can win more customers as the 4G network business heats up. CAPS member gimponthego says a longer time horizon is needed here:

Two years is ample time for other companies to see the success [Clearwire] has had with this "Fire Breathing Dragon." They will have a need to change, for one reason or another, and go with a winner.

No sinking feeling
Will the rapture that gripped sports fans during this year's World Cup fade now that Spain walked away with the title? While we'll probably be able to watch something else on TV when we walk into a bar, it's likely Electronic Arts will still reap the rewards of the spectacle. It sold 2 million copies of its FIFA 2010 World Cup game (at sixty bucks a pop) in a matter of weeks and later this year should be rolling out its 2011 version that it promises will be even more realistic. Perhaps it will have bad officiating, too.

With a breadth of play options available to gamers, CAPS member TWKommisar believes EA will build on its quality offerings:

Very little debt, and more than enough cash and short term investments to cover it. Acquisitions in social gaming (Playfish) and mobile gaming (Jamdat) in recent years gives [Electronic Arts] a breadth across multiple facets of the industry that no other company comes even remotely close to. [It] has more top-selling iPhone games than any other company (4 of the top 5) for 2009.

Gaming software sales in general rose 4% in May, according to the market researchers at NPD Group, thanks to Take-Two Interactive's Red Dead Redemption release. Perhaps World Cup fever will continue the trend through June.

Holy moly!
CAPS member elvoid points out that molybdenum, a byproduct of copper mining as well as mined on its own, is "an important part of stainless steel and other alloys." It helps explain why copper miner Freeport-McMoRan (NYSE: FCX) is the world's largest producer of molybdenum. But Freeport and General Moly might run into short-term surprises as copper demand in China plummeted. June shipments dropped 17% from and are down 31% from a year ago, meaning pricing is going to take a hit. Longer-range trends might be positive, but the short-term certainly seems comprised.

Drill into the molybdenum producer's prospects on the General Moly CAPS page and leave us your thoughts on what the China syndrome means for it.

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, so stop by and tell us which stocks are your own favorite contrarian picks.