Last month we took a look at a few companies that investors from our new CAPS intelligence database seem overly optimistic about, wondering if that was an indication of amateur "irrational exuberance." In this installment, we'll take a look at a few more companies that CAPS investors have high hopes for.

A quick review
One of the tools contrarian investors use to gauge the popular sentiment of a stock is the level of odd-lot trades being placed for it. In theory at least, the odd-lot level measures the number of small investors (those who can't afford full 100-share lots) currently backing a stock. If the level gets too high, a contrarian will view it as a sign that the stock price has been inflated by amateur investors and may short the stock.

Is CAPS a contrarian's dream tool?
Although our new Motley Fool CAPS service is still in beta-testing, it's already proving itself to be a revolutionary way to measure investors' sentiment on specific stocks. Almost ten thousand investors are already participating in CAPS and revealing their top picks in every area of the market simply by calling "outperform" or "underperform" on any ticker they choose.

The question is this: Are highly rated stocks in the CAPS database really good investments, or are CAPS investors contrary indicators? I'll leave that for you to decide. In the meantime, however, here are a few stocks whose ratings may be buoyed by some good old-fashioned "irrational exuberance":

% Outperform Ratings



SiRF Techonolgy (NASDAQ:SIRF)


Johnson & Johnson (NYSE:JNJ)


Activision (NASDAQ:ATVI)


JPMorgan Chase (NYSE:JPM)


Schlumberger (NYSE:SLB)


*Source: Motley Fool CAPS, as of Oct. 12, 2006

Think the CAPS investors are wrong about these stocks? Or maybe you think their rankings aren't high enough? In either case, get in the game and make your voice heard.

The next Buffett?
Successfully betting against the market is a surefire way of amassing huge returns, but gauging market sentiment is never an easy task. Great contrarian investors like Warren Buffett and George Soros are especially adept at taking the pulse of the market and making money by betting against it.

If you turn out to be a great contrarian investor like Buffett and Soros you might just become a CAPS All-Star someday. Sound good? Just follow this link for more information.

Fool contributor Todd Wenning does not own shares of any of the companies mentioned in this article. Johnson & Johnson and JPMorgan are Income Investor picks. Time Warner and Activision are Stock Advisor picks. The Motley Fool has a disclosure policy.