Da Bulls vs. Da Bears

Hey there, Fools. Welcome to another edition of Da Bulls vs. Da Bears, where I highlight closely contested "investment debates" taking place in our Motley Fool CAPS community. We always encourage our readers to listen carefully to both sides of any stock story -- the bull and bear cases -- to have the very best chance to make objective decisions.

But in light of the Indianapolis Colts' recent 29-17 Super Bowl victory over the Chicago Bears, I'll select two stocks in our database where even the CAPS bears trail by a healthy margin. Poor bears. Poor, poor bears.

The great stock debates
This week's two stock skirmishes involve:

Is Sony set to reset?
When a stock's pros and cons are clearly laid out by our community, it's much easier to figure out which angles are smart enough to play.

For example, the bullish sentiment regarding Sony is that its world-recognized brand, diverse mix of entertainment assets (PlayStation, Columbia Pictures, MGM, etc.), and various partnerships with such names as Time Warner (NYSE:TWX) and Comcast (NASDAQ:CMCSA) leave the company well-positioned for the next generation of electronics.

Here are a couple of CAPS players who support Sony as a solid and stable long-term investment:

• kpscott: The PS3 is only a very small bite of Sony's revenue (or lack thereof) ... Sony makes MANY more products besides gaming consoles, like cameras, computers, televisions, etc, and they have been a trusted name for a very long time, and will continue to be so.
• Hozer02: The 8 Thousand Pound Gorilla in the entertainment/electronics/media industry. Even with battery recalls, PS3 shortages, and the occasional movie bomb, this company is just too globally huge to ding.

Yet despite those arguments, there are many bears in our community who cite the rocky rollout of the PlayStation 3, a low-margin electronics division (which accounts for most of Sony's revenue), and a plethora of recent bad press as good reasons to spurn Sony's shares.

Listed below is some of the criticism that bearish CAPS gamers have thrown in the company's direction:

• moneyrocket: This stock is way overvalued. The PS3 is a total disaster from a value and price point perspective. Nintendo is going to win this round in the console wars. The company literally bet the house on the PS3 being as much a success as the PS2.

• TMFLomax: Lost its musical edge (the Walkman) to Apple's iPod. Its electronics business is largely a commodity business. The recent rootkit controversy didn't bode well for relationships with its customers (or its customers' attitude toward the company).

Who do you agree with? I'm siding with the Sony supporters, based largely on the analysis written by fellow Foolish Shannon Zimmerman when he selected it for Best International Stock for 2007.

Of course, if you disagree with me, feel free to give Sony an underperform rating here. (It won't cost you a dime -- just a couple of minutes.) Only time -- and CAPS -- will tell us who's right.

For whom the bear tolls
One more stock that our CAPS community bears can't seem to pull ahead on is Toll Brothers, the largest luxury homebuilder in the U.S.

The bullish support centers around Toll Brothers' seemingly attractive valuation, its focus on the high end of the housing market (making the firm less susceptible to rising interest rates), and its massive amount of valuable land assets -- some of which may be hidden in the balance sheet.

At least two CAPS residents have constructed high-end arguments in favor of the company:

• datajunky: This housing situation is not going to last forever so I think the market is being short sighted. They tend to build high end homes at $500K+ which makes them a little less sensitive to the vagaries of the housing market.
• TMFEldrehad: I've said it before, and I'll say it again, often the very best investments can be found by picking good companies in temporarily out of favor industries, and I believe this to be the case here.

But of course, this wouldn't be much of a stock debate if the entire picture was just rosy. In fact, many Toll Brothers bears think it's downright ugly. They allude to continued softness in the housing market, a worrisome trend in write-offs, and recent insider sales as fairly serious (and obvious) red flags.

These two CAPS participants, for example, attempt to blow Toll's high-end house down:

• GSH1976: The homebuilder stocks are in for a lot of pain in 2007. Recently they have been moving up on very questionable upgrades and many became buys from a technical perspective. Fundamentals rule out in the long term and unfortunately the fundamentals are not pretty.

• ctmedic: Check out the most recent insider activity ... hint hint hint ... they aren't buys. If the stock is so cheap why aren't the insiders lining up to purchase it?

So, what's your take on this stock debate? I'd have to agree with bulls once again, since high-quality, low P/E stocks (baked with lots of bad news) are some of my favorite bets to turn around.

Now, if you think I'm just being mean and looking to pick on all bears (Chicagoan, or otherwise) then join the bearish brothers in their den. CAPS will let us know who's getting the best of this bet over time.

Voice your opinion, Fool
There you have it. The competition regarding these two stocks will only get more intense over time and probably needs an investor like you to finally tip the scales in one direction. So sign up for Motley Fool CAPS now: It's fun and it's 100% free.

Be sure to join us next week, when I'll feature two more rip-roaring investment battles. And remember: whether you're a fan of grizzled bears, raging bulls, or sweaty hogs, this week belongs solely to the steadfast Colts!

Time Warner is a Motley Fool Stock Advisor pick. Discover all of Tom and David Gardner's stellar stock selections with a free 30-day trial subscription.

Fool contributor Brian Pacampara is delighted that Peyton is finally Da Man(ning) and holds no position in any of the companies mentioned. The Fool's disclosure policy is always a super performer.