Piggybacking on the picks of great investors and money managers can often lead to big rewards -- especially when the stocks in question are beaten down. If Warren Buffett finds opportunity in bonds, perhaps you should look there, too. Does Bill Miller think financial stocks are beaten down? Maybe investigating more closely will help improve your own results.
Over on Motley Fool CAPS, our top-rated All-Star players represent the best 20% of our more than 105,000 professional and novice investors. I'm looking among them for those who've chosen one- and two-star stocks to outperform the market. The majority of CAPS investors may consider these stocks losers, but if our ace contrarians think otherwise, these picks might be worth a look.
Here are a few stocks that have gotten the nod from the cream of our CAPS investors:
|
Company |
Est. Long-Term
|
CAPS
|
||
|---|---|---|---|---|
|
CoStar Group |
* |
30% |
99.25 |
|
|
Huntington Bancshares |
* |
5% |
98.04 |
|
|
Plug Power |
* |
35% |
95.82 |
|
|
Sovereign Bancorp |
* |
8% |
93.58 |
|
|
Corus Bankshares |
* |
NA |
91.45 |
Source: Motley Fool CAPS; Yahoo! Finance.
The CAPS chorus on Corus
Although Corus Bankshares provides typical consumer-banking fare, it also focuses its corporate banking products on commercial real estate ventures, primarily in California, Florida, and Las Vegas -- the exact places you don't want to be holding mortgages these days. Even though commercial real estate has thus far been immune to the meltdown witnessed in residential real estate, cracks are forming in the foundation.
During housing booms, commercial developments also rise in an effort to support all those people moving in. Though it's a lagging indicator, the same forces come into play on the way down. According to the National Association of Realtors, the commercial real estate leading index fell for the third straight time, while also posting its first negative year-over-year results in five years.
This weakening of the commercial markets could have short sellers betting that Corus shares will fall further. Profits fell 83% from last year, and it suspended its dividend because it suffered a 49% sequential increase in nonperforming loans. Roughly 70% of the bank's float is sold short, suggesting that investors foresee a further tumble in price, and perhaps believe the stock is lingering on its deathbed.
That's certainly the feeling of top-rated CAPS All-Star mandrake66:
I consider this stock to be one of the more likely bankruptcies before the year is out. Small bank with large exposure to almost all of the toxic sectors of the real estate market. No Fed bailout for this dunghill. Flabbergastingly irresponsible management and business practices.
However, not everyone is convinced that the situation is so dire. CAPS investor bigmommo gives us this insight:
I believe they have what it takes to weather this storm. Yes, they are heavily exposed to some tough markets. However, financials are strong (considering the circumstances), mgmt team is very much vested in this company for the long haul.
Finding value under rocks
There you have it -- five low-rated laggards that have gotten big endorsements from some of the best and brightest investors in the CAPS community, although there are always some who are not so sure. If you want to add your two cents on these or any other stocks, sign up to join Motley Fool CAPS, absolutely free.
