These Underdogs Are No Dogs

Short-sellers and hedge funds may be shadowy, but sometimes they are the smartest folks 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 cracks 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.

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
Where's the love? There is plenty of evidence that Advanced Micro Devices should be able to capitalize on its winning quarter, particularly as it leapfrogs on NVIDIA's (Nasdaq: NVDA) losses.

We had an inkling of what was to come in the wake of Microsoft's monstrous quarter and the gazillion copies of Windows 7 it sold. Computer sales were strong and AMD was enjoying the push notebook computers gave it. Even a remarkable quarter from Intel (Nasdaq: INTC) couldn't cast a shadow here. Yet nearly one-fifth of all CAPS members rating the chip giant don't think it can beat the market over the long run.

However, CAPS member jimspearmint thinks overlooking the potential AMD holds does your portfolio a disservice:

Doing the necessary tough work to get itself back on track while readying itself for better times ahead in the desktop PC market, where sales are increasing but consumers are still budget minded.

A dose of reality
Despite being resurrected from the dead following positive results from its lupus drug, Benlysta, investors in Human Genome Sciences really need to think about whether their company is just a zombie. Its hepatitis C drug failed to impress anyone, including itself, meaning all it's really got going for itself right now is Benlysta.

While all indications are that it will get the FDA go-ahead, Human Genome Sciences will eventually face competition from Immunomedics (Nasdaq: IMMU) and others. That could be why 30% of the nearly 500 CAPS members rating the biotech think it will underperform going forward. You can inoculate yourself from that outcome by heading over to the Human Genome Sciences CAPS page and telling us your thoughts on its future.

Market disconnect
A month or two ago, unseating Apple (Nasdaq: AAPL) from its iPhone throne might have seemed unthinkable. But in the wake of reports of Android-based smartphones outselling the iconic brand, it seems more than possible that Research In Motion could torch the competition with its own smartphone offering, the BlackBerry Torch.

If nothing else, CAPS member ashah1209 sees RIM getting a short-term boost from the new phone; whether it has any staying power remains to be seen:

Press release on August 3rd.. supposedly releasing the "Iphone killer." Doubtful that it will live up to its name but stock will probably run up before hand. Will sell on the news. [RIM] is losing ground to Google and Apple quickly and will continue its down slide after the press release.

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 on 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.