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 lay 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.

In through the out door
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). This week, investors believe they have found a steal of a deal in the stock of nuclear fuel producer USEC.

Hurt by a New York Times report describing cash flow problems, disappointing investments in new technologies, and rising input costs, USEC's stock stumbled last week, after more than doubling over the past year. This has not dissuaded Foolish investors, though. More than 95% of our All-Star investors continue to rate the stock an outperformer. Let's find out why.

The bull case for USEC

• Ayax2006 introduces us to the company: "USEC supplies low enriched uranium (LEU) for commercial nuclear power plants worldwide. It sells separative work units (SWU) and uranium components of LEU, as well as uranium. [Meanwhile] ... more countries are wanting to build nuclear plants. Plus nuclear proliferation around the world will add another extra demand for uranium ..."
• In this regard, martynanasi points out that it is "the only refiner of weapon grade uranium." donklenzman adds that USEC is "one of two uranium processors; only one in the US."
• GravityProof argues that "oil is still expensive and dirty. Nukes are clean and cheap. USU is the best value play in uranium. China needs a lot of it. So does North America. Europe, too."

Time to chime in
Are they right? Are they wrong? Tell us what you think on Motley Fool CAPS. On CAPS, it doesn't matter if your name has a TMF in front of it or a CFA after it. Unlike Wall Street, we welcome all comments on CAPS, where the best arguments -- and the best records -- carry the day.

(Psst! By the way, if you want to learn more about alternative energy plays, don't forget to claim a 30-day free trial to Motley Fool Rule Breakers. We've been researching the field for some time now and have a handful of likely winners already picked out for you.)

Fool contributor Rich Smith does not own shares of any company named above. The Fool has a disclosure policy.