Short-sellers and hedge fund operators may be shadowy, but sometimes they're the smartest guys in the room. They've done their homework, and they're willing to bet their capital against the crowd -- an investing strategy that can be as lucrative as it is contrarian.

On Motley Fool CAPS, we've also got leading analysts who find the chinks in a company's armor and correctly call its fall. Our "Underdogs" have earned 100 or more CAPS points by correctly predicting that one or more stocks would underperform the market. However, we're going to focus on the stocks these top members expect will outperform the market. If these CAPS investors have scored big by correctly predicting which stocks will fail, it may be worth our while to see which others they think will succeed.


Member Rating


CAPS Rating (out of 5)



Eastman Kodak (NYSE: EK)




Novavax (Nasdaq: NVAX)




Vonage (NYSE: VG)


Not every short sale goes as planned, making shorting a risky proposition. Stock prices can be irrational longer than you have money to stay in the game. So don't use this as a list of stocks to sell or buy -- just the launching pad for further research.

Underdogs still wag their tails
The outlook for Eastman Kodak isn't picture perfect. Quarterly earnings were once again out of focus because the film and camera maker is trying to reinvent itself by relying on one-time infusions of cash to filter its true, overexposed condition. That's why I nominated the stock as the worst investment for the year and the reason I say it should be buried.

Even management's changing its tune. While CEO Perez says Kodak's results show that the turnaround efforts are having an impact, full-year guidance indicates that it's not the kind the company was hoping for. Back in February, Kodak's forecast ranged from a $50 million loss to a $50 million profit; today the outlook is for all losses, and they could go as high as $150 million.

Complicating the picture is Kodak's decision to rely on patents that might be less than bulletproof. It's suing everyone from Apple (Nasdaq: AAPL) to Research In Motion (Nasdaq: RIMM), accusing them of violating patents in their smartphone cameras. Kodak did manage to finagle some settlements along the way, notably from Samsung, but not everyone has played along. Apple just countersued, saying Kodak's cameras violate its own deep patent portfolio. When you're trying to survive by using your patents to pad your bottom line until you can manufacture a turnaround, the risk of becoming overexposed mounts.

CAPS member Palamoka thinks Kodak needs to come up with some new breakthrough before it can become a winning investment -- although by selling off its OLED technology, it may have doomed that prospect already: "In my opinion, they are nearing the end of their life cycle unless they can develop the newest, greatest technology."

A dose of reality
Ah, for the good old days of swine flu and global pandemics. Back then, vaccine makers Novavax, BioCryst Pharmaceuticals (Nasdaq: BCRX), and Sinovac Biotech all ran up as fear gripped the markets and the immediate need for bringing a vaccine online fast had everyone hopeful. Then sobriety returned and the stocks rediscovered gravity. Each trades for half or less of its 52-week high.

In suggesting that Novavax can outperform from here, CAPS member zzlangerhans thinks the vaccine maker may finally have found its way in developing nations: "For the years I've been following Novavax, it seems like they've been puttering away in early clinical trials of their influenza vaccines while companies like Sanofi simply produce them and get them on the market rapidly to fill a need. Now their strategy seems to be aimed at marketing vaccines in the third world."

A golden opportunity
Will an international calling plan be the catalyst that finally rings Vonage's bell? The latest quarterly report shows that international calling is gaining popularity, at the same time that the Internet phone service drove average monthly fees per subscriber higher while reducing its customer churn. Of course, Vonage is still losing customers, but as more customers opt out of AT&T (NYSE: T) and other landline options, it could find itself a base to coalesce around.

CAPS member chitownjester thinks AT&T has lots to worry about and finds Vonage's financial position stable.

From a competition standpoint I would be worried about all the customers Vonage is taking from [AT&T], less so than any nominal loss of Vonage customers to Skype or [MagicJack]. My anecdotal experience proves this out.

That said, at [an enterprise value] of [$590 million] this company will be bought in 2-4 years. [So] there is the catalyst for the share price appreciation. Apple?

There's no need to fear ...
Underdogs often shine brightest with their backs against the wall. Still, it takes more than a few All-Star picks and a quick paragraph to make buy or sell decisions. Start your own research on these stocks at Motley Fool CAPS, where your opinion can still save the day. While there, you can read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made, all from a stock's CAPS page.

Apple is a Motley Fool Stock Advisor pick. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Rich Duprey has no financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a stress-free disclosure policy.