Contrarian Shopping List

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." -- Warren Buffett

Out of the quadrillions of quotations quarried from that most loquacious of quotationists, this one holds a special place in the hearts of Foolish investors. Are you looking to "buy low" so as to later "sell high?" If so, your best chance of getting that initial, low entry price comes when panicked sellers are unloading their shares at whatever price is on offer.

In today's column, we search the ranks of Wall Street's motivated sellers, and note which stocks they're most frantic to unload. Therein may lie the makings of a contrarian investor's shopping list. But don't just take my word for it. Before you decide to go in through Wall Street's out door, check your thinking against the collective intelligence of Motley Fool CAPS investors.

Today's contenders include:

The problem with pessimism
The problem with going against the grain on Wall Street is that when professional traders get pessimistic, their grim outlook can become a self-fulfilling prophecy -- at least in the short term. The more that institutions become desperate to abandon a stock, the lower the price they'll accept to get rid of it. And as their "ask" prices drop, the "bid" prices of buyers will fall in tandem, creating the very price decline that they feared in the first place.

Until the selling stops.

When it will stop is anybody's guess. But until it does, savvy investors have a chance to "get greedy," and snap up some bargains from these fearful sellers (if bargains they truly be).

A wealth of (mediocre) choices
We're faced with an interesting conundrum this week. Wall Street's "sell" list offers us three stocks tied for first place to choose from. However, "first" is a relative term this week, with a mere three stars sufficing to qualify for the title. Which of our three-starred stocks shall we profile this week? I choose dairy king Dean Foods, the most-rated of the trio. Let's see what CAPS investors are saying about it.

Got milk?
Ninety percent of the 90 investors who've chimed in on Dean like the company, including 25 of the 28 All-Star investors rating the stock. But opinions are a bit more mixed than a surface reading of those numbers would suggest:

• On the one hand, we've got investors like mnadel arguing that "Horizon and the White Wave product line are everywhere -- and this is not a trend that's going anywhere any time soon. People are willing to pay for organic milk. The stock does not yet reflect this explosion." And tomellen225 echoes that sentiment, pointing out that "the rest of their business is solid. Dean's milk has created the perception of being a higher quality brand. Management seems to be focusing resources intelligently."
• On the other hand, some of our highest-rated players don't like Dean much at all. All-Star investor sandvig, for instance, points out that "revenue growth is at a five-year low," yet "the shares are currently trading at a P/E premium to the S&P 500 of about 30%." Fellow All-Star Greshm devoted an entire blog entry to criticizing Dean's recent issuance of debt to fund a monster $15-per-share dividend (read it here).

Time to sound off
So does milk really do a body good? Or will an investment in Dean Foods just curdle your portfolio? Whatever your views, don't keep them to yourself! Come on over to Motley Fool CAPS and join the discussion. Get a load off your chest, and share what you know with your fellow investors. Together, we'll beat the Street yet.

Fool contributor Rich Smith does not own shares of any company named above. You can find him on CAPS, publicly pontificating under the handle TMFDitty, where he's currently ranked 67th out of nearly 25,000 raters.