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. These savvy Fools are willing to see both the upside and downside of a stock. Their often negative opinions peg them as skeptics, but their top CAPS ratings mean they're right far more often than not. And when they find a stock they think will outperform, perhaps we should take notice.

Here are some recent picks from our list of Foolish CAPS skeptics:

Company

CAPS Rating

Skeptic

Player Rating

Hardinge (Nasdaq: HDNG)

*****

TDRH

100.00

BioCryst Pharmaceuticals (Nasdaq: BCRX)

*

luvb2b

99.98

Walgreen (NYSE: WAG)

****

turbotrager

99.94

Titan Machinery (Nasdaq: TITN)

****

majorleaguecrank

99.11

Electronic Data Systems (NYSE: EDS)

**

hitecguy

94.69

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

Skeptically skeptical
Anyone who has looked at Walgreen the stock can see that the pharmacy disguised as a convenience store has had a rough go of it. A bad quarter last October was the catalyst that set its stock in downward motion. Only recently has that trajectory slowed.

Part of the attraction of investing in Walgreen is the commitment that management has to growing its footprint nationwide. It's confident the market can support 13,000 stores; currently they have a little less than half that number and plan to open an additional 500 to 600 new stores a year over the next two years.

Yet January showed part of the risks of its strategy when pharmacy same-store sales were off more than 4% for the month -- a mild cold and flu season hurt performance. The company's convenience store disguise, however, has helped lift overall sales as the company focuses on new high-margin items like ink-jet cartridge refills. Pharmacy sales account for two-thirds of Walgreen's revenues, and although comps were up overall for the month, they were hurt by the introduction of generic drugs.

For the future, Walgreen needs to worry about rival CVS (NYSE: CVS) as well as Wal-Mart (NYSE: WMT), which is introducing $4 generics on certain drugs and opening low-cost clinics to bring more people in. Perhaps Wal-Mart will soon become the opposite of Walgreen, a discount retailer disguised as a pharmacy.

A prescription for growth
The upside potential has attracted CAPS All-Star investors, like xthecritic, who see the need for the pharmacy services outweighing the risks of Wal-Mart's entry, even though those risks loom large.

Seems like a safe play to go long here after recent declines. Downside should be limited and the fundamentals for drug store chains should be good over the long term. Plenty of old people will be heading to the pharmacy. Consumer staples and healthcare should outperform during the economic slow down.

Of course, Walmart is a real threat so this is not a no-brainer but I will take the risk.

Similarly CAPS players like dew250 see Walgreen as a better value than other pharmacy players, like CVS, with solid fundamentals to boot, as does another All-Star investor, Gtrinvestor, with a 99.95 player rating, who doesn't see drug stores becoming a thing of the past anytime soon. With a fairly recession-proof drug business, Walgreen ought to continue its recovery.

Looking past the obvious
Skeptics know that 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. 

Hardinge was selected by Motley Fool Hidden Gems Pay Dirt. Don't be skeptical about the 30-day, free trial offer available for any of the Fool's investment newsletters. It's yours for the asking simply by clicking here! Wal-Mart is an Inside Value pick.

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