5 Hated Stocks

What's with all the venom, my friend?

I just got back from making a few picks in the new Motley Fool CAPS interactive beta service, and I was surprised at how some of my favorite companies are like flypaper for bears.

So, what are the five stocks that your fellow investors believe will underperform the market in the future? I'm about to spill the skinny, and some of the choices may surprise you.

It seems like an odd collection of companies. You have a firecracker in the same stew as a few turnaround situations. The companies haven't necessarily burned investors, as three of the five stocks are actually trading higher than they were a month ago, as well as a year ago.

So, I have to ask again, what's with all the venom?

Death to Google
I'm a fan of Google. In the CAPS simulation, I'm one of the 299 investors who feel that Google will beat the market in the future. Bears dislike Google for several reasons. The stock has been nearly a five-bagger since it went public in the summer of 2004, and wild runs like that often accompany lofty valuations. In Google, you also have a company that derives 99% of its revenue from Internet advertising. It's a lucrative, high-margin field, but some are concerned that Google has too many eggs in the paid search basket.

I'm not going to claim that Google is dirt cheap when it's trading for almost 35 times next year's earnings, but that's certainly not such an outlandish market premium for a company that has proven its ability to grow at a feverish pace. Google is no saint. The "do no evil" mantra has been put to the test a few times since the company went public. I don't expect a company to be perfect. As it turns out, many of my peers feel that the only thing perfect about Google is that its shares are richly priced for perfection.

Fell for Dell
Then we have the company that pioneered operating efficiency through a direct selling model that glossed over stuffing the retail channels in favor of making hot and fresh custom-ordered PCs just for you.

CEO Kevin Rollins has been on the hot seat (or is it the cold boot?) lately as the company has struggled. The company that made a living out of lapping profit targets and priding itself on stellar customer service now finds itself coming up short on both fronts.

Even the likely boost that the entire sector will get when Microsoft finally rolls out Windows Vista in a few months seems to be lost on Dell's bears. They feel it will take more than that before Dell regains its shine.

Detroit , rocked city
No, I wasn't surprised to see GM and Ford on the list. However, did you know that GM was one of the three companies on the list that has actually seen its shares climb over the past month? And year?

All this has been lost on investors, as car owners have traded in their beefy GM and Ford drives for smaller imports and hybrids. Even with gas prices starting to creep lower, some auto industry watchers feel that the domestic automakers will need to be stripped clean and built anew on the assembly line.

I'm not as pessimistic. I'll wait until I see how the 2007 models fare and whether the more reasonable prices at the pump help win back the drivers lost.

Hard times for Mr. Softy
Isn't it funny how both Microsoft and Google -- mortal enemies at this point -- are both widely unloved? Microsoft has been dogged more by slowing growth concerns than valuation issues. Did you ever think that you could snap up a stake in Microsoft for just 16 times next year's profits? That may explain why Philip Durell recently recommended Microsoft to his Motley Fool Inside Value subscribers.

To be fair, of the five stocks with the biggest group of head shakers, Microsoft is the only one with a two-star rating. The other four have a one-star rating -- the lowest possible score on the CAPS five-star system.

Will its new operating system get it back on track? Bears seem to think it may not be enough. They see the world's leading software maker's popularity waning as companies like Google and Sun Microsystems (NASDAQ:SUNW) move applications online. Even if Linux hasn't made much of a dent as an open source alternative to Windows in the PC space yet, it has left a mark in other areas, and I wouldn't undersell the potential of a crafty company like Red Hat (NASDAQ:RHAT) to further monetize the platform.

Hate is more than a four-letter word
So, where do you stand? Do you view the bearish bent on these five stocks as an ominous sign, or do you embrace this chance to load up as a contrarian?

Tough call. The market just loves to throw forks in the road at you. Me? I use that fork to dig into the community salad. You know, it's the healthy greenery there for the feasting when you can round up as many investors as possible to weigh in on a particular investment.

That's the part of hate that I truly love.

Motley Fool CAPS is a new community-driven experience where individual investors pool their knowledge to seek out stock ideas. Are you up for the challenge? You have nothing to lose -- your first seven picks are free, so go ahead and give it a shot.

Longtime Fool contributor Rick Munarriz believes that sometimes you have to be cruel to be kind. He does not own shares in any of the companies in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy , which makes him disclose that Dell is both a Motley Fool Inside Value and Motley Fool Stock Advisor pick.