It pays to be skeptical when you invest. 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's new breed of contrarian investor can be found at Motley Fool CAPS, where these savvy Fools are willing to see both the upside and downside of a stock. While their often negative opinions peg them as "skeptics," 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 our list of Foolish CAPS skeptics:


CAPS Rating (out of 5)


Player Rating





First Marblehead (NYSE:FMD)




Archer Daniels Midland (NYSE:ADM)




Suntech Power (NYSE:STP)








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

Skeptically skeptical
It's not exactly high cotton, but corn production has gotten an enormous boost because of ethanol demand. That's hardly news, but I'm sure the recent report stating that ethanol and similar biofuels may actually be more harmful for the environment than the fossil fuels they're supposed to replace gave some people pause. Whether or not that changes any minds, the near-term impact will probably be slight. For companies like Archer Daniels Midland, the silos will remain stocked.

Demand has fueled so much ethanol production there's actually an oversupply, leading to falling prices. ADM may find it advantageous to reap a ripe harvest of weaker producers, much as VeraSun Energy (NYSE:VSE) did when it bought US BioEnergy (NASDAQ:USBE) in a $700 million deal expected to close soon.

Yet as tempting as the falling valuations of competitors might be, ethanol production is actually only a small part of what ADM does. Corn processing accounts for only 12% of revenue; agricultural services and oilseeds processing account for the vast majority of this diversified agricultural company's top line. It can therefore afford to move carefully in picking potential partners.

Planting the seeds for growth
The upside potential of ethanol is certainly attractive, but CAPS All-Stars like KenN513 see the biggest growth in ADM's mainstay business:

"Most of us have focused on ADM's increasing production of fuel ethanol. Fuel ethanol production is ecologically unsound and socially irresponsible. That said, American consumers love it. They think that they are "going green" by using corn based fuel. I think that "green-ness" of ethanol fuel will drive stock prices over the short term. The realities of fuel ethanol, however, will eventually bite ADM.

"But not hard. ADM is a highly diversified agricultural products corporation. They will be using ag products for their profits for many years. So they go back to making seed oil? It's what they do. It's been profitable for decades. Expect them to continue to ride the ethanol boom up, then drop back to traditional levels after they've relearned to stick to their core business."

Another All-Star Capsperson agrees, and says investors need to "think bigger" than looking at ADM as just an ethanol play:

"ADM purchases, transports and processes agricultural commodities such as corn, wheat, cocoa. Don't pick this company for the ethanol play. Think bigger. Their products are used for paints, plastics, mining, industrial chemicals and household products in addition to the obvious food play. Recent earnings owe much to the agricultural processing side of the business (milling) which profit grew by 140%. Great long term pick."

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.