7 Surprising 1-Star Stocks

Surprises are part of the game when it comes to picking stocks. Sometimes this can mean bad news, like one of your top stocks revealing that its investment holdings are chock-full of bonds backed by failing subprime loans.

Other times, though, the market gets caught off guard by positive surprises from stocks that most investors thought were down for the count. In this situation, investors who stood by the stock often break out into a chorus of "I told you so" as short sellers are forced to figure out just how much pain they can take.

To dig up some of these unloved stocks that have been defying naysayers, I'm turning once again to The Motley Fool's CAPS community. Each of the companies below had been given a one-star rating (the lowest) by our community of investors 30 days ago:

It's important to realize that some of these stocks, particularly the smaller, more volatile ones, could just as easily reverse these big gains over the next 30 days. In some cases, though, the strength could be a sign that the prospects for the company have changed for the better, or that it had been beaten down just a little too far.

So the question with these stocks is: Are they better than CAPS players had thought, or are they just singing that proverbial swan song? The best way to get a feel for where these guys are headed is to dig in and do some research. I thought I'd kick you off with some thoughts on Gateway.

Thus spake Acer: Mooooooooo!
So if you haven't yet seen the news, Gateway, the PC seller known for its humble beginnings and characteristic cow spots, has not managed to pick itself up out of the rubble. Taiwan's Acer has bent down to salvage Gateway and, if the deal goes through, become the third-largest PC maker in the world.

As PC guts continue to get cheaper, and computers become an increasingly common fixture in U.S. households (and worldwide, for that matter), the competitive advantage in the PC industry has been changing. Although it could be argued that Apple (Nasdaq: AAPL) has found a way to sell a computer as more than a box around an Intel processor and a Seagate disk drive, PC behemoths Dell (Nasdaq: DELL) and Hewlett-Packard seem to be in a race to see who can get their razor-thin margins the sharpest.

For better or worse, this seems to be the way to win sales in the mass market. From the travails of Dell, we know that you can't neglect small things like customer service, but cheap and easy seem to be the key words in selling PCs today. Therefore, it would follow that unless you have the flexibility afforded by an iconic cash-cow music player, he who has the size has the advantage.

On Gateway, CAPS player tx117 recently pitched his thumbs-down, saying, "[T]his company is on life support. It is a highly competitive market and I'm not seeing any new ideas coming from these folks." The question then may be whether, in a quest for size, Acer is adding "good" size by picking up Gateway. Chinese PC maker Lenovo made a growth leap through acquisition a few years back, but it was picking up the more highly regarded PC division of IBM.

Can a new owner pump life back into Gateway and help the combined entity become a threat to Dell and HP? I won't say it's not possible, but the sales are probably still Dell's and HP's to lose.

Will the Gateway and Acer tie-up shake up the global PC market? Or is there nothing for the leaders to worry about? Head over to CAPS and let the community 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 4,900-plus stocks on CAPS.

More CAPS Foolishness:

• 5 All-Star Stocks on Fire
• Invest Like a Pro: Morgan Stanley Asset Management
• 7 Highly Rated Stocks on Sale

Dell is a dual recommendation of The Motley Fool's Inside Value and Stock Advisor newsletters. Intel keeps Dell company on the Inside Value recommendation list. You can keep both Dell and Intel company by snagging a free 30-day trial of Inside Value.

Fool contributor Matt Koppenheffer didn't see these particular moves coming, but he's rarely surprised at Mr. Market's general tomfoolery. You can check out Matt's CAPS portfolio here, or visit his blog. He does not own shares of any of the companies mentioned. The Fool's disclosure policy is never going to give you up, it's never going to let you down, and it's definitely never going to run around and desert you.