Top-Rated Stocks the Leaders Loathe

Momentum investors get behind companies with the wind in their sails. Contrarian investors typically pick up the cigar butts the market has tossed aside. So what do you call investors who turn against winners? Sourpusses? Shorts?

Over on Motley Fool CAPS, we sometimes call them the savviest investors around. Not only does the 65,000-strong investor-intelligence community rate thousands of stocks every day, but the players themselves also get rated. The best of the lot -- what CAPS calls All-Stars -- consistently outperform their peers over time, and are assigned ratings of 80 or greater.

When an All-Star player sours on a top-rated stock, perhaps we should take notice. Perhaps the player's found a chink in that highflier's armor, or a question mark in its financial footnotes. Or maybe it's just a hunch. That's why these tables aren't lists of stocks to buy or sell -- just starting points for further research.

Here's a list of stocks that some All-Stars have given the thumbs-down:

Company

CAPS Rating (Out of 5) 

1-Year Return

CAPS All-Star

Player Rating

Boeing (NYSE: BA  )

****

23.4%

av0084

99.36

BHP Billiton (NYSE: BHP  )

*****

109.8%

robertm03

94.53

Zix (Nasdaq: ZIXI  )

****

284.8%

lonewulf47638

93.86

Intuitive Surgical (Nasdaq: ISRG  )

****

219.1%

ToddJoseph

93.00

3SBio (Nasdaq: SSRX  )

****

25.3%

Hassio

91.84

More than 5,500 investors have rated these stocks; on average, 96% of them are bullish on their prospects. Some 97% of All-Stars agree that they'll outperform the market. So what might have turned some of CAPS' top players against these otherwise widely admired companies?

A masterpiece in the making -- or a fraud?
Only a few weeks ago, Intuitive Surgical was highlighted as a company approaching greatness, a four-star rated stock on CAPS with a medical device that seems far and away an industry leader. Intuitive's da Vinci system translates a surgeon's hand movements into precise instrument movements inside the patient, without the need for open surgery. Hospitals are clamoring for it, and they proudly promote their acquisition when they get one. So why are some CAPS investors looking askance at this company?

It could be the company's meteoric rise in share price. Shares have more than tripled in value over the past year. Many of those casting their votes against this Motley Fool Rule Breakers recommendation admit that they'll switch allegiance -- for the right price.

For example, CAPS player JordanRules45 notes that too much of a good thing can simply be too much:

Love this stock, but topping out for the near term. Too much, too fast. I will flip-flop at a decent level (probably around 280).

Similarly, genuwin1 believes that despite Intuitive Surgical being an exceptional company, valuation is a primary consideration right now:

This is a great company with a great product, but market euphoria has driven it to an overvalued price. Its earnings would have to grow by 50% for about 5 years to get its PE down near the S&P average. Not likely.

The da Vinci system's manufacturer has confounded naysayers for a while now, but can Intuitive Surgical continue to defy those who expect it to fall?

Make lemonade from lemons
We know both sides here, but Motley Fool CAPS is more than what a handful of pros think -- even if they're All-Stars. You're invited to share your thoughts and insights, and add your voice to the debate. Go ahead, have your say. We're eagerly waiting!


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