Surprising Low-Rated Stocks the Leaders Love

Piggybacking on the picks of great investors and money managers can often lead to big rewards -- especially when the stocks in question are taking a hit. If Buffett's finding opportunity in bonds, perhaps you should look there, too. Bill Miller thinks financial stocks are beaten down. Maybe investigating more closely will help improve your own results.

Over on Motley Fool CAPS, our top-rated All-Star players represent the best 20% of our 110,000-plus professional and novice investors. I'm looking among them for those who've chosen one- and two-star stocks to outperform the market. The majority of CAPS investors may consider these stocks losers, but if our ace contrarians think otherwise, these picks might be worth a look.

Here are a few stocks that have gotten the nod from the cream of our CAPS investors:

Sources: Motley Fool CAPS, Yahoo! Finance.

Floating on a cloud
For most people, using a software application means starting one up from your computer's memory. Salesforce.com is hoping to change that thought process by making itself a player in the software-as-a-service model, or, as it's coming more to be known, "cloud computing." You might have already used such a program without even realizing it when you used one of the many apps Google (NASDAQ:GOOG) offers. In fact, Salesforce last April began directly integrating Google Apps into its application platform. Users can build applications combining Google's programs seamlessly with Salesforce.com's own.

The attention Salesforce has received from the business community leads many investors like to see the company in a growth phase as costs stay controlled. As CAPS member Griz29 puts it:

Their product is simple to use and flexible. They seem to be succeeding at selling to major corporations. Once they get a foot in the door their products tend to spread and stick around for a long time. Expenses will stabilize as the product matures and the profits will keep rolling in.

Getting a charge
General Motors (NYSE:GM) is lining up about three dozen utilities to collaborate on being able to plug in its electric car, the Chevy Volt. If GM is putting its very existence into the proposed vehicle, as it seems, then perhaps lithium-ion battery maker Valence Technology has a future yet.

For 18 years, Valence has produced nothing but losses, so some investors think it's about time the company lies down on its deathbed. Its batteries have so far been powering the way-cool human-transportation device Segway -- I rode one recently, and now I need to get one -- but the GM shift might create more interest in what Valence has to offer. That's why CAPS member mrhappyface sees the battery maker outperforming the market as the technology continues to advance: "Lithium ion battery designed for use in hybrid and electric cars-replaces old tech batteries weighing 2000lbs with batteries weighing 250lbs and taking much less time to charge -- the refinement and need for this type of battery will continue."

Yet others remain unconvinced. CAPS All-Star BiLoandWise thinks any hype surrounding Valence is just more of the same of what investors have become accustomed to with this company: "Another company with lousy financials. It has nothing to sell except its own hype about its supposed "breakthroughs" while never delivering the goods."

Finding value under rocks
So there you have it -- five low-rated laggards that have won endorsements from some of the best and brightest investors in the CAPS community, although there are always some who aren't so sure. If you want to add your two cents on these or any other companies, join Motley Fool CAPS, absolutely free.