Jumping into a stock because your rich neighbor did, or because you heard about it from your friend's uncle who used to work on Wall Street, or because CNBC has been talking about it nonstop is a recipe for disaster.

If there's one thing I've learned as a stock analyst, it's that any stock can be gussied up to sound like a world-beater. If there's a second thing I've learned, it's that being a smart person doesn't make you a good investor.

In the hands of a smart person with good communication skills, the never-were and never-will-be stocks sound like tickets to instant fortune. The ancient Greek philosophers made the distinction between rhetoric and knowledge. The former is convincing; the latter is true.

That's why we factor in track record in our Motley Fool CAPS community. We invite everyone to give stocks an outperform (i.e., a "buy") or underperform rating (i.e., a "sell") in CAPS. We then use those opinions to calculate a rating for each stock -- from one to five stars (five being the best). But -- and this is a big distinction -- we give more weight to the opinions of folks whose picks have performed well in the past.

The No. 1 buy in energy
So, with that methodology as prelude, I present to you the top chemical stock and the runner-ups based on the number of CAPS members who have rated the stock an outperform. Only stocks garnering a five-star rating are included.    


Market Capitalization (in millions)

Outperform picks

CAPS Rating (out of 5)

Agrium (NYSE: AGU)




ShengdaTech (Nasdaq: SDTH)




Chemical & Mining Co. of Chile (NYSE: SQM)








China Green Agriculture (NYSE: CGA)




Innophos Holdings (Nasdaq: IPHS)




Gushan Environmental Energy Limited America




Praxair (NYSE: PX)




Syngenta AG (NYSE: SYT)








Source: Motley Fool CAPS as of Aug. 12, 2010.

More CAPS members think agricultural nutrient player Agrium is a buy than any other five-star chemicals stock. Do you think a different stock deserves to be the No. 1 buy? Make your thoughts known in CAPS by clicking here. Or just go there to do further research on one of these 10 stocks.

Anand Chokkavelu doesn't own shares of any company mentioned. China Green Agriculture and Syngenta AG are Motley Fool Global Gains picks. The Fool owns shares of China Green Agriculture and Innophos Holdings. The Fool has a disclosure policy.