Short-sellers and hedge funds may be shadowy, but sometimes they are the smartest guys 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 today 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.
E-Commerce China Dangdang
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
Piracy is rampant in China, and I'm not even talking about the notorious penchant for knocking off the latest software title, movie, or integrated circuit. Basically dubbing themselves as "China's whatever" has allowed Chinese IPOs to tap into investor enthusiasm for hitting the next Big Thing.
Renren went public as the Chinese version of Facebook, Youku.com was its YouTube, and E-Commerce China Dangdang is consistently billed as China's Amazon.com
If it really wants to compare itself to Amazon, Dangdang is going to have to try and match the stellar performance the e-commerce leader turned in last quarter, when revenues surged 51% even as profits slid 8%.
"Amazon of China" just transitioning into more than books (similar to Amazon). Has developed infrastructure for delivery in China (including rural areas) with local couriers. This takes time to develop and gives them a temporary competitive advantage.
Use the E-Commerce China Dangdang CAPS page to let your fellow Fools know whether you think the company can match Amazon.
An eroding foundation
If the tech sector's success stories included more than just iPads and iPhones, Micron Technologies might be doing a whole lot better than it is. Instead, with its specialties in the areas that are doing worse than usual, like PC memory chips, it's leaving the likes of SanDisk
Key customers Nokia
Tell us on the Micron Technology CAPS page whether it will chip away at the negative sentiment surrounding it.
Did we disconnect?
Announced earlier this year, the merger deal between Progress Energy and Duke Energy
Opposition to the union has launched several shareholder lawsuits, one of which accused Progress of accepting Duke's bid too quickly and not seeking a better offer from competitors. Dominion Resources was one company said to be willing to bid more for the utility. Progress is willing to pay the plaintiffs $550,000 just to make it go away.
Whatever the outcome, the CAPS community has been supportive of Progress' progress, with 91% of the nearly 300 members rating it believing it will outperform the broad market averages. Add Progress Energy to the Fool's free portfolio tracker to see whether these two companies will be better together.
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.
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