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. Investors such as Warren Buffett, Benjamin Graham, and John Neff abhor the "wisdom of crowds."

Today's new breed of contrarian investor can be found at Motley Fool CAPS, where these savvy Fools are willing to see both the upside and the downside of a stock. While 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 list of automatic buys. But it does offer an excellent starting place for your own research of extreme buying opportunities.

Inquiring minds want to know
The market volatility we're seeing isn't the start of a new bull market rally based on a resurgent economy, but rather seems more typical of how stocks react in bear market recessions. One indicator was that the fact that retail stocks have been ignored in the latest euphoric surges, and rightly so.

The Census Bureau says retail sales in May fell 1.2%, the first decline since last fall. The jobs picture also got worse, with initial jobless claims increasing well ahead of expectations. Economists have been expecting claims for benefits to drop below 450,000, but instead they rose by 12,000 to 472,000. Consumer spending was a factor in the disappointing earnings report issued by Best Buy (NYSE: BBY) the other day.

Sometimes, though, it all depends on where you look. When you see more than 600,000 iPhone 4 pre-sales for Apple in just one day and the iPad generating even greater demand, you can expect that retail results won't be even. Yet Steve Jobs' ability to excite the base has to be worrisome to Amazon.com. Some analysts believe that consumers won't spend $259 on a Kindle e-reader, which has been a source of revenue growth for the e-commerce leader, when for a few dollars more they can get an iPad.

CAPS member presregan still believes Amazon has what it takes to meet its rivals head-on.

The leader as far as I am concerned will be [Amazon.com]. Although the current stock option price is hefty, I believe that as the cloud computing market gears up, amazon is poised to take on all comers. Amazon has the resources and up-time to really handle any company or corporations needs regardless of its size or scope. 

No sinking feeling
It's pretty bad when you come out on the short end of a popularity contest with BP. While the oil giant has to confront the millions who are upset about the devastation in the Gulf, it pales in comparison with the ill will directed at Goldman Sachs, which outpolled the Gulf pariah by almost 2 ½ to 1 in a recent Motley Fool survey.

Being thought of as a "financial good-for-nothing" leads investors like CAPS member jflurett to seek a pound of flesh from Goldman Sachs.

This is more of a play on hope. I hope that that government will finally come to bat for the public as they should. I hope there will be heavy investigation, stiff penalties/fines, and jail time. How about some repayment of the losses suffered by the public as well a la BP.

Of course, when emotions run high, it could create an opportunity as judgment becomes clouded. That's undoubtedly behind the sentiment jlefebvr9 expresses when he suggests Goldman will always find a way to make money.

A bright idea
As Blockbuster (NYSE: BBI) circles its wagons, maybe preparing for a reorganization, rival Netflix gallops on. Its stock is up more than 125% so far this year and has tripled over the past 12 months. Stock market woes? Not here!

So that makes Netflix's decision to authorize a $300 million buyback program a bit of a head-scratcher. Netflix wants to buy its shares when they're trading at all-time highs, but a buyback is usually undertaken when a company determines that it can't earn more elsewhere, or at the least to counteract a costly dilution. CEO Reed Hastings either thinks his stock price is poised for the next leg up -- or it's going to be headed sharply lower, so he would be scooping up bargain-priced shares.

Like a number of analysts, CAPS member BayAreaDave thinks streaming video represents a grave threat.

On Demand video has made Netflix a [dinosaur]. When they start losing market share or making price cuts and losing revenue, the price will sink

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. It pays to start your own research on these stocks on Motley Fool CAPS, so stop by and tell us which stocks are your own favorite contrarian picks.