As an investor, it doesn't pay to follow the crowd.
In this series, though, we highlight a possible exception -- the collective wisdom of our CAPS community. Read the next section if you're unfamiliar with our methodology. Skip it if you want to go straight to the results.
Why this crowd is different
Jumping into a stock because your rich neighbor did, or because you heard about it from your friend's uncle who used to work on Wall Street, or because CNBC has been talking about it nonstop is a recipe for disaster.
If there's one thing I've learned as a stock analyst, it's that any stock can be gussied up to sound like a world-beater. If there's a second thing I've learned, it's that being a smart person doesn't make you a good investor.
In the hands of a smart person with good communication skills, the never-were and never-will-be stocks sound like tickets to instant fortune. The ancient Greek philosophers made the distinction between rhetoric and knowledge. The former is convincing; the latter is true.
That's why we factor in track record in our Motley Fool CAPS community. We invite everyone to give stocks an outperform (akin to a "buy" call) or underperform rating (akin to a "sell" call) in CAPS. We then use those opinions to calculate a rating for each stock -- from one to five stars (five being the best). But -- and this is a big distinction -- we give more weight to the opinions of folks whose picks have performed well in the past.
The most hated stocks in metals and mining
With that methodology as prelude, I present to you every one- and two-star metals and mining stock with a market capitalization of more than $100 million and 50 or more underperform ratings. Remember, stocks are rated on a five-star scale by our CAPS community, so one- and two-star stocks are consensus underperforms. The stocks are listed in order of number of underperform picks.
|
Company
|
Market Capitalization (in millions)
|
52 Week Price Change %
|
Price-to-Earnings (TTM)
|
CAPS Rating (out of 5)
|
Underperform Picks
|
|
Uranium Energy (NYSE: UEC )
|
$151
|
5%
|
N/M
|
*
|
181
|
|
Allied Nevada Gold (NYSE: ANV )
|
$1,949
|
164%
|
32.8
|
*
|
110
|
|
Randgold Resources (Nasdaq: GOLD )
|
$8,211
|
57%
|
82.4
|
**
|
108
|
|
China Natural Resources (Nasdaq: CHNR )
|
$240
|
(10%)
|
29
|
*
|
101
|
|
Seabridge Gold (NYSE: SA )
|
$1,150
|
0%
|
N/M
|
*
|
99
|
|
Gold Resource
|
$703
|
150%
|
N/M
|
*
|
78
|
|
James River Coal Company (Nasdaq: JRCC )
|
$466
|
(3%)
|
9.4
|
**
|
78
|
|
Fronteer Gold (NYSE: FRG )
|
$889
|
71%
|
34.8
|
**
|
76
|
|
Iamgold Corp
|
$6,673
|
52%
|
56.5
|
**
|
66
|
|
Ivanhoe Mines
|
$8,448
|
90%
|
N/M
|
**
|
63
|
|
Anglogold Ashanti
|
$16,051
|
17%
|
N/M
|
**
|
56
|
Source: Motley Fool CAPS. N/M = not meaningful. TTM = trailing 12 months.
Most of these stocks have had a nice run-up over the last year. The gold-related companies are leading the charge here. For those like me who troll the 52-week low lists, that's not necessarily a good sign. Clearly, the CAPS community is seeing danger.
More CAPS members think Uranium Energy, an aptly named uranium miner, will underperform the market than they do any other metals and mining stock. Do you think it deserves this lack of love? Make your thoughts known in CAPS by clicking here. Or just go there to do further research on one of these stocks.
You can also see which metals and mining stocks are the CAPS community's favorites by clicking here.
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