Successful investing requires you to think independently and stick to your convictions. That's hard enough with stocks that are generally popular -- after all, in the stock market, there's a seller for every buyer. But it gets even tougher with stocks that don't seem to draw good press or bullish investors anywhere. Of course, defying popular opinion has led many contrarian investors to great returns.
In that spirit, I've headed to Motley Fool CAPS to dig up some unloved stocks that have delivered big gains to shareholders over the past month. Our community of investors has put each of these companies on the bottom two rungs of the CAPS rating scale:
|
Stock |
30-Day Return |
One-Year Return |
Current CAPS Rating |
|---|---|---|---|
|
Shuffle Master |
37.8% |
(65.2%) |
** |
|
Canadian Solar |
29.8% |
300.2% |
** |
|
STEC |
28.2% |
123.4% |
** |
|
Sulphco |
20.9% |
3.0% |
* |
|
Blockbuster |
16.7% |
(24.8%) |
* |
|
Polo Ralph Lauren |
14.6% |
(27.4%) |
** |
|
HouseValues |
11.5% |
(38.3%) |
* |
Data provided by Motley Fool CAPS and Yahoo! Finance as of June 5.
Now, given CAPS' knack for accurately gauging winners and losers, I'm not recommending that you run out and buy these stocks. An index set up to short CAPS' least-liked stocks has outperformed almost 95% of all other CAPS players. That said, CAPS players have proved overly negative on some high-performing stocks. Are any of the stocks in the table above the same sort of undercover rockets?
Providing the pep
If we can say that a company gets a base hit when it announces earnings that meet Wall Street's expectations, then we might say that Canadian Solar, which is based in China but incorporated in Canada, hit a grand slam with its earnings in mid-May.
The company announced revenue of $171 million and earnings per share of $0.61, which clobbered the analysts' target of $0.31. To top it off, management also said that it expects second-quarter revenue to be $185 million to $190 million -- again ahead of what the wonks on Wall Street were looking for. The 300% gain in Canadian Solar's stock may seem like a bit much, but the company did manage to increase revenue roughly tenfold from the first quarter of the prior year and turn a net loss into a tidy profit. We all know that solar is hot, but this is scorching.
And the company doesn't seem to be getting ready to slow down any time soon. A trio of recent events suggests that the supply of raw materials and demand for finished products will continue to fuel Canadian Solar's bottom line.
Combing CAPS
With a two-star rating on CAPS, we might expect that Canadian Solar has its share of critics -- and it does. However, there are roughly 4.5 bulls on CAPS for every bear, so there are also plenty of investors who think there's still more to come.
On the bear side, top CAPS player TDRH joined other players in thinking that a downturn in oil could affect the share prices for alternative energy companies. He expects that "as the price [of oil] falls these absurdly valued alternative energy plays will correct with profit taking."
Fellow All-Star CelticAces has already scored more than 100 points by getting bullish on Canadian Solar back in mid-February. He said:
Renewable energy is even more of a global concern now than in [2007], and with both Democrat and Republican candidates showing a strong commitment to this, they should continue to grow strong, recession or not. [Canadian Solar] is going to be one of the top solar picks for [2008].
So what's your take? Is there good reason to get more bullish on Canadian Solar right now, or are its sunnier days numbered? Head over to CAPS and let the community of more than 105,000 Fools know what you think. While you're there, you can start your research on any of the other stocks listed above, or any of the 5,700-plus stocks rated in CAPS.
More CAPS Foolishness:
