As an investor, it doesn't pay to follow the crowd.

In this series, though, we highlight a possible exception -- the collective wisdom of our CAPS community. Read the next section if you're unfamiliar with our methodology. Skip it if you want to go straight to the results.

Why this crowd is different
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 records in our Motley Fool CAPS community. We invite everyone to give stocks an outperform (a "buy") or underperform rating (a "sell") in CAPS. We then use those opinions to calculate a rating for each stock, from one to a maximum five stars. 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 automotive buy
Meet the top automotive industry stock (and the runners up), based on the number of CAPS members who've 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)

Tata Motors (NYSE: TTM)




Honda (NYSE: HMC)




Wonder Auto Technology (Nasdaq: WATG)




Spartan Motors




Drew Industries (NYSE: DW)




Miller Industries (NYSE: MLR)




Tongxin International




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

More CAPS members think Indian carmaker Tata Motors is a buy than any other five-star automotive stock. If you were hoping to see Ford (NYSE: F) and Tesla (Nasdaq: TSLA) on the list, they currently rate three stars and one star, respectively.

Do you think a different stock besides Tata Motors deserves to be the No. 1 buy? Make your thoughts known in CAPS by clicking here. Or just go straight to CAPS to do further research on one of these popular stocks.

As for me, I'd love to rate Ford an outperform and Tesla an underperform, but I'd like to see lower prices for Ford, and higher prices for Tesla, before taking either action. You can see my CAPS profile here.