When investing in the stock market, it pays to be skeptical. In addition to doubting what the analysts tell you, you often have to discount what the companies tell you, too. On Wall Street, going against the grain can reap huge rewards. Like baseball's greatest place hitter, "Wee Willie" Keeler, great contrarian investors such as Benjamin Graham, Warren Buffett, and John Neff "hit 'em where they ain't."

Today, I'm looking at a new breed of contrarian: the Motley Fool CAPS "skeptic." These savvy Fools are willing to see both the upside and the downside of a stock. While their opinions tend toward the pessimistic, their top CAPS ratings mean they're right far more often than not. And when they find a stock they actually believe will outperform, perhaps we should take notice.

Here are some recent picks from five Foolish CAPS skeptics:


CAPS Rating


Player Rating

Duke Energy (NYSE: DUK)




RF Micro Devices (Nasdaq: RFMD)




Bon-Ton Stores (Nasdaq: BONT)




Fidelity National Finance (NYSE: FNF)




Goldman Sachs (NYSE: GS)




Just as a list of their worst stocks would not be a list of stocks to short, these skeptics' favorites aren't automatic buys. But they do offer an excellent starting place for your own research.

Green with envy
Some wags have called it "Goldman envy," the pangs of jealousy and regret that gripped investment banking firms and financial institutions for the way the white shoes at Goldman Sachs not only got the big deals, but the big bucks, too.

It's said that Stan O'Neal, the recently deposed boss at Merrill Lynch (NYSE: MER), used to chide subordinates for not turning in Goldman-like numbers. There was speculation about whether his replacement, John Thain, could remake the Raging Bull into the likes of Goldman Sachs. Morgan Stanley (NYSE: MS) would use Goldman Sachs' numbers to compare with its own performance.

Yet what everyone gets real envious about is the bonus pool its top employees swim in. Reports indicate that over the past three years, the bonus pool that Goldman has split grew to $20 billion in 2007 from as much as $11 billion in 2005. 

Of course, we need to look at why it's making those kinds of big bucks. And the main answer is that it has been smarter than the competition. While Merrill, Morgan, and others were buying mortgage-backed securities, Goldman slipped on its green eyeshades, analyzed things a little more closely, and basically beat feet while it could. It reduced its mortgage holdings and bought insurance on what remained. That it has come through as well as it has shows that the naysayers are perhaps a little green with envy themselves.

The innate intelligence of the investment bank has attracted CAPS All-Stars like Cheekybloke, who has a 93.90 player rating. Here's the pitch from yesterday:

Investment bank that smartly did not go after the "easy money" of subprime mortgages and thus has been relatively unscathed by the unfolding financial crisis. However, like all financials, the stock has been pulled down to P/E levels not seen in a long time. As a result, good upside / downside risk with the added positive that many of its competitive peers have been wounded by the financial crisis.

That's the kind of thinking that has earned SquawkerB the top-rated bull pitch for Goldman Sachs.

This is one of the best brokerage firms out there. If you want to feel comfortable with their management, see how they beautifully hedged their bets on the subprime meltdown and make a great quarter, while the other brokerages were a mess. You gotta love this company. They just get it done.

Seeing past the obvious
Skeptics know that just beyond the storm clouds lies a shimmering morning. Conversely, the sun can't shine forever, whatever the crowds may think. What's your forecast? Drop by CAPS and tell us which stocks are your favorite contrarian picks.  

Duke Energy is a Motley Fool Income Investor recommendation. Don't be skeptical about the 30-day free trial offer.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.