Generalizations will kill your portfolio.

It's too easy to dismiss an entire sector, especially one that's out of favor. If an industry's fundamentals are weak, most investors will simply walk away from a basket of related stocks.


I see things differently. The darker the business, the broader the disparity between its participants. The bleaker the prospects, the better the chance that there's a budding disruptor, ready to reinvent its moribund niche.

I don't run from ugly industries. I run to them, sifting through the unwanted to find my next garage-sale Picasso.

Let's go over a few stocks that I think fit the bill in the landfill.

Vistaprint (Nasdaq: VPRT)
There seems to be nothing sexy about the commercial printing business. Companies that crank out business cards or pens with corporate logos are as sleepy as they come. The recession obviously isn't going to help, because companies mired in layoffs and wage freezes aren't going to be springing for personalized car-door magnets or calendars to send to prospective clients.

It is in this dreary climate that Vistaprint is rocking. The Web-based provider of short-run commercial printing orders grew its revenue by 30% in its latest quarter. Rubber stamps with company logos? Not sexy. Double-digit adjusted profit margins? Very sexy.

It's true that Vistaprint's earnings didn't grow as quickly as its top line in its latest quarter, but at least it's positive -- and at least it's still growing.

Green Mountain Coffee Roasters (Nasdaq: GMCR)
Starbucks (Nasdaq: SBUX) made premium coffee sexy several years ago, but then a perfect storm of overexpansion, competitive clones, and a weak-kneed economy took it in for a bruising. The company barely earned more in fiscal 2008 and 2009 combined than it did during fiscal 2007.

Starbucks is starting to bounce back off its depressed levels, but there's one java junkie that has thrived. Green Mountain is the company behind the Keurig single-cup brewers. Along with K-Cup refills, the company has carved a new market for premium servings at home, corporate breakrooms, and hotel lobbies.

Green Mountain is still climbing. Net sales in its latest quarter rose 68%, with net income nearly doubling. The good times should continue, because 731,000 brewers and 720 million K-Cup portion packs shipped during the quarter.

Homebuilders began crumbling when the housing bubble popped, and rightfully so. The frothy speculation that jacked up prices dried up, and we still have a situation where there's a glut of vacant existing homes.

Toll Brothers (NYSE: TOL) is typically played up as the industry's darling, and some of that is earned. The builder of moderately upscale communities has rocked during the upturn. Commanding a healthier balance sheet than its peers helped it stay afloat during the downturn. However, the grim reality is that Toll Brothers has posted 11 consecutive quarterly losses. That's not a leader. That's a bleeder.

NVR has held up considerably better. Save for one quarterly slip -- in the fiscal fourth quarter of 2008 -- NVR has been consistently profitable. It's not making as much money as it used to, but it's the one homebuilder that has kept its head above the water.

51job (Nasdaq: JOBS)
Job-listing websites haven't thrived lately. It may come as a surprise, because a spike in unemployment would seem to create a larger pool of those seeking work. At parent Monster Worldwide (NYSE: MWW), revenue slipped 16% in the latest quarter.

Where can an investor turn for a little more octane in this sector? China! 51job lists job openings in several region-specific weekly print publications. It also runs a popular workforce recruiting website. Business is booming at the other end of the world, as revenue spiked 43% in 51job's latest quarter.

It was no surprise to find 51job hitting a new high last week.

Roll up those sleeves and dive in with me
I'm a member of the analyst team for the Motley Fool Rule Breakers newsletter service, so seeking out disruptors in unlikely places comes naturally. Vistaprint and Green Mountain Coffee Roasters are recent recommendations, in fact.

It's the best way I know to buy into the stocks that will breathe life into any portfolio.

You don't need to join me and my fellow analysts to unearth monthly treasures. Hopefully I've done a good enough job of teaching you how to spot neglected sectors and single out the desert roses in them. If not, you'll know where to find me.

Join Rick and other like-minded investors for a free 30-day ride on the Rule Breakers newsletter service.

This article was originally published on March 20, 2010. It has been updated.     

Longtime Fool contributor Rick Munarriz leaves no stone unturned. He does not own shares in any of the stocks in this story. Vistaprint and Green Mountain are Rule Breakers selections. Starbucks is a Motley Fool Stock Advisor recommendation. The Fool has a disclosure policy.