5 Stocks That Swayed the Skeptics

It pays to be skeptical when you invest. In addition to doubting what the analysts tell you, you often have to discount what the companies tell you, too. On Wall Street, going against the grain can reap huge rewards. Like baseball's greatest place hitter, "Wee Willie" Keeler, great contrarian investors such as Benjamin Graham, Warren Buffett, and John Neff "hit 'em where they ain't."

Today new breed of contrarian investor resides at Motley Fool CAPS, where savvy Fools are willing to see both the upside and downside of a stock. Although their often negative opinions peg them as "skeptics," their top CAPS ratings mean they're right far more often than not. And when they find a stock they actually believe will outperform, perhaps we should take notice.

Here are some recent picks from our list of Foolish CAPS skeptics:

Just as a list of their worst stocks would not be a list of stocks to short, this list of the skeptics' favorites isn't a roster of automatic buys. But they do offer an excellent starting place for your future research.

Skeptically skeptical
Despite the pullback in gold-mining stocks and disappointing results from some of them, including Freeport-McMoRan (NYSE:FCX), the continued weakness of the dollar against major currencies such as the euro makes gold once again seem like an attractive place to be parking money. That means new money will make its way to the mining companies that can be production cost leaders -- such as Newmont Mining, which CAPS member Jonorski pegged earlier this year as a "rainy day" stock: "Newmont is a well managed producer, lower cost, expansion minded (by [acquisition] and add'l mines) with reserves to keep them busy, and new mines coming on line."

Barring unforeseen circumstances …
Barr Pharmaceuticals is set to be acquired by Teva Pharmaceuticals (NASDAQ:TEVA) in a bid to create the world's largest generic-drug company. The $8 billion offer would hand Teva the lead in women's health -- where Barr currently dominates with a number of drugs -- as well as give the combined company a toehold in Eastern Europe, where Teva comes up short.

Teva is the dominant leader in virtually every market it's engaged in. According to IMS Health, there will be some $20 billion worth of products going off patent this year, and that number is expected to grow over the next few years. Even if the merger falls through, Barr should be able to slice into a few pieces of that pie.

StoxInves finds Barr's global presence and earnings improving, particularly if the acquisition goes through:

Barr Pharm. manufactures generic products. Is a global company with operation in more than 30 countries. Generic products are generally cheaper than most brand ones. Market is quite huge for cheaper products in the developing nations. 1Year growth is high. Quarterly earnings are good. [Earnings per share are] not that impressive. But the whole picture may change after if acquisition by Teva occurred.

Are you a Pepper?
Though it could turn out to be a novel approach to turning around shares, whose price has been sinking since the company's spinoff, Dr Pepper Snapple's new ad campaign features pop-icon "doctors" -- think basketball legend Julius "Dr. J" Erving and Kelsey Grammer's Dr. Frasier Crane. But the tagline "Trust me, I'm a doctor" seems more likely to channel those cough-medicine commercials where a soap-opera star uttered the now-parodied phrase "I'm not a doctor, but I play one on TV."

Still, in May, CAPS member BShaw010 believed that the company's sheer breadth of brands gives Dr Pepper Snapple room to grow:

Dr Pepper Snapple holds a unique portfolio of strong brands with leadership positions in various beverage markets. In addition, the company has the benefit of experienced management. Based on the historical and pro forma information in the registration statement filed with the SEC, [Dr. Pepper Snapple] is attractively valued by most standard financial metrics, so the stock has room to grow based on both performance and the elimination of the current discount placed on the stock.

Seeing past the obvious
Skeptics know that just beyond the storm clouds lies a shimmering morning. Conversely, the sun can't shine forever, whatever the crowds may think. What's your forecast? Drop by CAPS, and tell us which stocks are your favorite contrarian picks.