Momentum investors love to back 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. When one of our All-Star players -- ranked in the top 20% of our community -- sours on a top-rated stock, perhaps we should take notice. Maybe the player has 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 recently spurned:
|
Company
|
CAPS Rating
|
1-Year Return
|
CAPS All-Star
|
Player Rating
|
|
Taseko Mines (NYSE: TGB )
|
*****
|
107.1%
|
Kvedarna
|
98.39
|
|
Covance (NYSE: CVD )
|
*****
|
56.5%
|
tenmiles
|
99.76
|
|
Pepsi (NYSE: PEP )
|
*****
|
25.4%
|
phi16
|
99.46
|
|
Landec (Nasdaq: LNDC )
|
*****
|
(13.0%)
|
fishbig
|
86.91
|
|
AMIS Holdings (Nasdaq: AMIS )
|
****
|
(17.1%)
|
JohanHansen
|
81.05
|
On average, 97% of the investors who made a choice think these companies will outperform the market. What might have turned some of CAPS' top players against these otherwise widely admired companies?
Yes, we have no bananas ...
Or we wouldn't if Landec didn't make a special polymer that allows them to breathe properly during shipment from farm to grocery aisle. Landec's Intelimer brand has allowed the Motley Fool Hidden Gems recommendation to broaden its partnership with Chiquita (NYSE: CQB ) . The packaging company is also enjoying the fruits of an agreement made with Monsanto (NYSE: MON ) for a special coating on seeds that allows farmers to plant earlier in the season, with the seeds remaining safe until the temperature is just right. The agricultural-products company pays Landec's operating expenses, along with a licensing fee, for the application.
While a handful of CAPS investors have soured on Landec, few have penned their reasons for thinking it will underperform. One who did, sraepalf1, thinks the company over the long haul will be successful but won't beat the market in the short term until organic-produce stores catch on.
As a purchaser for a large restaurant, I understand the value of shelf life for fresh foods. However, most produce, seafood, poultry, beef, etc. purveyors deliver 6-7 days a week.
Organic food outlets are the niche for Landec. It will take awhile for non-organic outlets to join in because of the cost difference for the packaging.
As a long term investment I believe Landec products will catch on. For the near future (1-2 years) the stock cannot outperform the S & P.
Look for the price of the packaging to come down, then pounce.
For Landec bulls, it already represents an attractive valuation. In his pitch, written just a few days ago, tenmiles notes the company's strong financials and finds it to be an "inexpensive play on worldwide agriculture."
At $11, Landec has retreated to a price that places it in a good risk/adjusted position for new money. ROE an impressive 35%, good margins, strong balance sheet and growing domestic and global demand for food packaging polymers. Insiders hold roughly 25% of stock -- inexpensive, indirect play on worldwide agriculture -- downside from here should only be a couple more points -- likely double within three years.
Make lemonade from lemons
We've seen both sides here, but Motley Fool CAPS is more than what individual investors think, even if they're All-Stars. It's where we invite you to share your thoughts and insights; help the 80,000 members of our growing community become better investors.
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