Short-sellers and hedge funds may be shadowy, but sometimes they're the smartest guys and gals 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 chinks 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.
China Shen Zhou Mining & Resources
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
Investors are becoming more knowledgeable about what constitutes a rare-earth mineral miner, as opposed to a mining outfit based in China with only the most tangential relationship to the latest hot trend. Molycorp, despite not digging yet, could be considered one of the former, because it owns the rights to some potentially valuable U.S. rare-earth deposits. China Shen Zhou Mining & Resources would belong to the latter group.
China Shen Zhou mainly mines fluorite, copper, lead, and zinc. While some apparently believe that its mines might contain traces of rare-earth minerals, China Shen Zhou didn't mention anything about them in its prospectus materials when it took advantage of the feeding frenzy for its shares by making a secondary stock offering last month.
Its shares have more than quintupled in value over the past year, and anyone hoping to get in on the craze is now late to the game. The miner's shares are down 30% year to date, reflecting the ebbing tide of euphoria that had gripped the market. Indeed, virtually all so-called rare-earth miners are down significantly, with China GengSheng Minerals plummeting 46% since the start of the year and Rare Element Resources
The new sentiment is also no doubt related to the understanding that rare-earth minerals aren't rare. In fact, they're quite plentiful. One thing China Shen Zhou bulls like CAPS member ryansal have right is that fluorite has lots of industrial uses, including its role as a melting agent in steelmaking, and in manufacturing hydrofluoric acid.
Add China Shen Zhou to your watchlist, and see whether it can dig itself out of this mess.
A well-dressed opportunity
To hear some public interest groups tell it, the unleashing of "Frankenfoods," like Syngenta's genetically modified corn, will wreak cataclysmic havoc on the world's food chain. Yet through genetically modified seeds from Monsanto
Syngenta's corn seed is also being targeted for industrial uses, specifically the production of ethanol. We've seen the impact that using feedstock for fuel has on commodities prices, so a crop particularly targeted for that purpose might alleviate the fear that filling up your gas tank will be taking food out of the mouths of babes. While critics worry about that genes from the modified seed might cross-pollinate their way into regular crops, the enzyme Syngenta used to modify the seed is naturally occurring (the human body even produces it) and was approved for human consumption by the FDA.
CAPS All-Star TMFDeej singled out Syngenta at the end of last year precisely because of rising food prices: "Food prices are headed higher in 2011. Suppliers to farmers, including seed, machinery, and fertilizer should benefit."
Let us know on the Syngenta CAPS page whether you'll lend your ear to the critics or the supporters of genetically modified foods.
Last quarter, construction and engineering giant URS reported benefiting from increased demand in the infrastructure sector and expected to win a lot of stimulus spending for high-speed rail projects. While there might still be some dollars floating its way from the tax handout, high-speed rail has been getting a chilly reception from the cash-strapped state governments that would be responsible for paying for cost overruns. Governors in Wisconsin, Ohio, and Florida have all questioned the need for the spending, and the House voted to eliminate $1 billion in high-speed rail funding from the president's budget.
While high-speed rail faces an uncertain future, the CAPS community is fairly certain that URS will still beat the market; 95% of those rating the company mark it to outperform. Add the engineering firm to the Fool's free portfolio tracker, and keep tabs on whether it rides the rails to higher profits.
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.
Syngenta is a Motley Fool Global Gains selection. Motley Fool Options has recommended a synthetic long position on Monsanto. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.