Successful investing requires you to think independently and stick to your convictions. That's hard enough with stocks that are generally popular -- after all, in the stock market, there's a seller for every buyer. But it gets even tougher with stocks that can't seem to find good press or bullish investors anywhere. Of course, defying popular opinion has led many contrarian investors to great returns.
In that spirit, I've headed to Motley Fool CAPS to dig up some unloved stocks that have delivered big gains to shareholders over the past month. Our community of investors has put each of these companies on the bottom two rungs of the CAPS rating scale:
|
Stock |
30-Day Return |
1-Year Return |
Current |
|---|---|---|---|
|
Acordia Therapeutics |
53.8% |
61.8% |
* |
|
Quantum Fuel Systems Technologies |
42.9% |
20.2% |
** |
|
The Children's Place Retail Stores |
29% |
(30.4%) |
** |
|
Standard Pacific |
23.4% |
(82.6%) |
* |
|
NGAS Resources |
17.1% |
16.7% |
** |
|
Hot Topic |
16.7% |
(45.7%) |
* |
|
Charter Communications |
15.7% |
(66.3%) |
** |
Data from Motley Fool CAPS as of June 18.
Now, given CAPS' knack for accurately gauging winners and losers over the first year we have data, I'm not recommending that you run out and buy these stocks! An index set up to short CAPS' least-liked stocks has outperformed more than 98% of all other CAPS players. That said, CAPS players have been overly negative on some high-performing stocks. Are any of the stocks in the table above the same sort of unloved winners?
The naysayers
It's not hard to see why investors might be bearish on Quantum Fuel. This is a sub-$200 million company trading at less than $2.50 per share that's involved in next-generation alternative energy technology like hydrogen storage systems and plug-in electric hybrid fuel cells. The financials are a mess -- for the first nine months of its 2008 fiscal year, it lost more than $80 million on $17 million in revenue, and it has actually never produced any profit or cash flow. As of the end of its January quarter, the company sported a debt-to-equity ratio higher than 200%.
CAPS player itsacointoss also pointed out that despite the lackluster financial performance of the company, management hasn't been shy about collecting big paychecks:
Company execs feel they deserve fat bonuses with the company head over heels in debt. The stock holders will soon realize this company cares nothing about the investor.
To put some numbers to the sentiment, in 2007, though Quantum Fuel posted massive losses, four executives received total compensation of more than $1 million. Considering the size of the company, that's quite a payday.
Naysaying the naysayers
But anybody who decided to short the stock since the beginning of the year is likely picking their jaw up off the ground right about now. Since 2008 rolled in, the stock is up an amazing 355%.
Why the big run? There are a number of reasons. For one, investors are likely excited by the fact that the company is working on alternative energy solutions at a time when oil prices are breaking records day after day. Quantum has also gotten a boost from some new contracts, including a $17 million deal that its solar subsidiary Asola announced in late May.
And topping it all off, there have been rumors that the company could be a takeover target for one of the large automotive players. Crazy? Maybe not. Given the state of the auto industry, it may be unlikely, but the majority of Quantum's revenue comes from General Motors
On CAPS, the stock recently got a big upgrade from rock-bottom one-star status to two stars. CAPS players clearly appreciate the exciting industry that Quantum is involved in and see big potential. One CAPS player, Ladybuggy, gave the stock a thumbs-up recently and said:
Oil prices are forcing folks to look to the alternatives in order to set our country on a different course. Many true alternatives out there, and Quantum in an excellent long and short term part of that. Clearly in the sweet spot right now.
Make your call
So what's your take? Is there good reason to get more bullish on Quantum Fuel right now, or are its outperforming days numbered? Head over to CAPS and let the community of more than 110,000 Fools know what you think. While you're there, you can start your research on any of the other stocks listed above -- or any of the 5,500-plus stocks on CAPS.
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