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 Motley Fool 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 record in our CAPS community. We invite everyone to give stocks an outperform (akin to a "buy" call) or an underperform rating (akin to a "sell" call) 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 top 10 materials and construction underperform calls
So, with that methodology as prelude, I present to you the 10 one- and two-star materials and construction stocks with the most CAPS community member underperform ratings (I used a minimum market capitalization of $100 million and the proviso that stocks must be listed on a major U.S. exchange). Remember, stocks are rated on a five-star scale by our CAPS community, so one- and two-star stocks are consensus underperforms.

Company Name

 Market Capitalization (in millions)

52-Week Price Change %

Price-to-Earnings (TTM)

CAPS Rating (out of 5)

Underperform Picks

Pulte Homes (NYSE: PHM)

     $3,092

-39%

NM

*

752

Toll Brothers (NYSE: TOL)

     $2,834

-26%

NM

*

744

Lennar (NYSE: LEN)

     $2,051

-15%

NM

*

729

KB Home (NYSE: KBH)

      $925

-42%

NM

*

686

Beazer Homes (NYSE: BZH)

      $275

-16%

2.1

*

668

D.R. Horton

     $3,320

-24%

347.7

*

608

Hovnanian Enterprises (NYSE: HOV)

      $242

-32%

NM

*

601

Ryland

      $735

-30%

NM

*

372

Meritage Homes

      $567

-23%

16.8

*

356

NVR (NYSE: NVR)

     $3,675

-9%

16.8

*

296

Source: Motley Fool CAPS. NM= not meaningful.

It's not terribly surprising that every member of this bottom-dwelling list is a homebuilder. Even a quality homebuilder with actual earnings like NVR gets a one-star rating. When there's this much pessimism, even in our CAPS community, my contrarian instincts kick in. I'm not saying any of these stocks is a buy right now (the housing market is still tenuous), but I'm keeping the homebuilder industry on my radar.

More CAPS members think Pulte is an underperform than any other materials and construction stock. Do you think it deserves this lack of love? Make your thoughts known in CAPS by clicking here. Or just go there to do further research on one of these stocks.

You can see the flip side -- the top-rated materials and construction stocks, by clicking here.

Anand Chokkavelu doesn't own shares of any company mentioned. Meritage Homes is a Motley Fool Stock Advisor selection. The Fool has a disclosure policy.