5 Stocks That Swayed the Skeptics

When you're investing, it pays to be skeptical. In addition to doubting what the analysts tell you, you often have to discount what the companies 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, I'm looking at a new breed of contrarian: the Motley Fool CAPS "skeptic." These savvy Fools are willing to see both the upside and downside of a stock. Their opinions tend toward the pessimistic, but their top CAPS ratings mean they're right far more often than not. And when they find a stock they say will outperform, we should listen.

Here are some recent picks from five Foolish CAPS skeptics:

Just as a list of the skeptics' worst stocks would not be a list of stocks to short, these favorites are not automatic buys. But they do offer an excellent starting place for your own research.

An Olympic-sized opportunity
The Beijing Summer Olympics this year will be a high profile event. China has been gearing up to put its best game face on -- through measures both mundane and controversial -- and companies servicing the Olympics are in the spotlight too. One that might truly experience a glow is Suntech Power, which has an exclusive contract to provide solar power for the main stadium.

The attention couldn't come at a better time. With solar gaining more credibility as a viable and practical form of renewable energy, solar stocks such as Suntech, First Solar (Nasdaq: FSLR), and Yingli Green Energy (NYSE: YGE) have been basking in their day in the sun. Suntech, a Motley Fool Rule Breakers recommendation, is the low-cost, high-volume producer of traditional silicon photovoltaic cells.

Yet even among Suntech bulls, there are words of caution. CAPS player mcplay doesn't think there's enough differentiation among the industry rivals, but feels that high oil prices will lift all boats. Here's his pitch from late December:

Alternative energy stocks will be hot as long as oil stays above $75 a barrel - so probably for the foreseeable future. STP should do well throughout 2008 - but it really doesn't have much of a competitive advantage. So - ride it while you can - certainly while oil prices stay high - but be ready to bail out if the valuation gets extremely high or oil prices drop below $70.

Of course not everyone feels this way; plenty of investors think Suntech's products will ultimately separate the wheat from the chaff. Even so, sometimes more practical reasons to consider an investment present themselves: Solar energy and Chinese stocks are "hot" now. That's what attracted All-Stars such as Capsperson, with a 97.59 player rating, who thinks you're getting two plays for the price of one in Suntech, as well as strong fundamentals:

Everyone needs one solar play if you're not already playing the sector. Everyone also needs at least one China play, and STP provides both. The P/E is high at 94 but with PEG of 2.3, appears more in line. STP is historically a profitable company which markets to Europe and the US as well as China. Good returns on equity and assets should continue to make STP a good choice. However, they do need to better manage their resources to compete globally.

Hope I didn't come too late to the party.

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. What's your forecast? Drop by CAPS and tell us which stocks are your favorite contrarian picks.