Is Wall Street Wrong About These Stocks?

Wall Street fawns over the companies listed below. So why do our Motley Fool CAPS members disagree? They've tarred these stocks with one- and two-star ratings, signaling their lack of faith that the associated companies will outperform the market.

So who's got it right? The professional class of analysts, sitting in their paneled offices smoking stogies, or a motley crew of community investors, pooling their best thoughts for others to share? We think we know who'll come out ahead. How about you?

Source: Motley Fool CAPS.

As much as we love our CAPS community, don't sell these companies short just because they've garnered the lowest opinions. By the same token, don't buy them solely on Wall Street's say-so. Investing requires closer diligence on your part, so use these ratings as a launching pad for your own research.

Laugh until you cry
I'm not exactly sure who suffers from pseudobulbar affect, a sudden onset of uncontrollable laughing or crying. (Maybe fans of football's Carolina Panthers, with their 2-14 record?) But analysts estimate that with the field to itself, Avanir Pharmaceuticals can generate more than $500 million in peak U.S. revenue for its therapy, Neudexta.

Doctors typically go off-label in treating the illness, using Teva Pharmaceutical's (Nasdaq: TEVA) Copaxone or Avonex from Biogen Idec (Nasdaq: BIIB). Neudexta will be used in conjunction with those therapies. It makes sense, then, to consider that Avanir could now become a very attractive target for either of those companies to acquire. Novartis (NYSE: NVS), which also has a strong focus on central nervous system disorders, might be another potential buyer.

Over on CAPS, Shankapotamus expects a buyout to boost Avanir, but says the company's also ready to take it to the next stage alone, if need be:

Avanir is a takeover target for big business, has approved drug, little or no debt and enough money for its production and distribution, I believe that large company that already has spoken waiting for the Q4 11/30/2010 to offer for the shares, the next month I see some of these big companies could get started talking to Avanir to buy next year

Let us know who you think will be left laughing and crying on the Avanir Pharmaceuticals CAPS page.

One small step for Mann…
I've written a few articles about Alfred Mann's purchase of his company's stock, noting the sizeable investment he's been making in the company as a potential bullish signal for the future of its inhaled insulin therapy Afrezza. Well, maybe not so much. The therapy might not still get approval, but as reader beauars reminded me, there's more to the purchases than simple management confidence.

Back in August, MannKind entered a $350 million revolving loan agreement with investment firm Seaside 88, which will be buying up to 700,000 shares of company stock every two weeks for almost a year, at an 8% discount to the market price. However, at the same time, Mann is also required to purchase a like number of shares, which will serve to reduce the outstanding balance of the loan.

Now, you can argue that Mann entered that agreement in the first place because he was confident in Afrezza's chances of passage. But as long as Seaside 88 keeps buying the stock on the cheap, we'll continue to see Mann's name pop up on the insider buying lists. Don't read any more into his presence than simple obligation.

Add MannKind to the Fool's free portfolio tracker to have all the news and analysis about the biotech aggregated for you in one place.

Picture perfect
My Foolish colleague Rick Munarriz thinks Netflix could be the next Coinstar (Nasdaq: CSTR) --  and that's no compliment. When the kiosk-movie-rental giant said rentals were down big time, its stock plunged 27%. Rick ties this drop to the agreement Coinstar made with the movie studios, permitting them a four-week delay before it makes new DVD releases available. Netflix got a similar deal, and Rick says that since renters can get a release at Blockbuster a month before Redbox or Netflix, Coinstar's crash was all but inevitable.

Unfortunately for Blockbuster, having that lead on its rental rivals hasn't helped it much. Moreover, entertainment sales in general fell in 2010. DVD sales dropped 13%, music CD sales plunged 19%, video game sales were down, and theater attendance was off.

Streaming video remains the key to Netflix's future, and with two-thirds of its subscribers using the service, a "Netflix button" appearing on remotes, and a proliferation of partnerships to expand its audience, Netflix looks ready to overcome any 30-day delays. iamthecountry says it's the complete package:

Ok this stock is very high, but it can go higher, I like that they have the dominant marketshare of the growth of streaming movies. I like the algorithm. I like the company culture. I like how they handle foreign expansion.

What's wrong with that?
It pays to start your own research on these stocks on Motley Fool CAPS. 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.

Sign up today for the completely free service, and tell us whether Wall Street or Main Street will ultimately win out.