5 Stocks That Swayed the Skeptics

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 the downside of a stock. While their often-negative opinions peg them as "skeptics," their top member 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:

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 it does offer an excellent starting place for your own research of extreme buying opportunities.

Inquiring minds want to know
The agricultural business has been a, um, cash crop lately for seed purveyors like Monsanto and Syngenta (NYSE:SYT) -- although you wouldn't know it from watching their share prices wilt like a cornfield in a summer drought. Yet Monsanto just raised guidance for the full year well above previous expectations, as its seeds and genomics business continue to produce a lot of profits. CAPS member uclayoda87 figures relatively high valuations will come down.

The stocks P/E ratio is high, but I believe that the company will have a steady growth in earning over the next 4 years, which will bring this ratio to 10 to 15 range. A future cash cow with a value P/E ratio.

Offering rich promotions to shoppers hurt Winn-Dixie in its fourth quarter. But officers at the supermarket chain apparently believe that consumers continue to look for low-cost opportunities, so they will continue its "Good Til" program, which offers reduced pricing on more than 1,000 products. Being the low-cost leader is what has helped Kroger (NYSE:KR) maintain and expand its market share, and it reported a greater than 3% profit increase for its latest quarter. Top-rated CAPS All-Star tenmiles finds Winn-Dixie's beaten-down valuation -- it trades near its 52-week lows -- an attractive entry point for a chain with many things going for it.

At $13.89, debt free WINN looks like decent defensive play in here relative to overall market. Key valuation and peer metrics look attractive trading below book value with low p/s. Company is guiding to 20% improvement in EBITDA in 2009; $200 million in cash on hand - should do no worse than overall market from current depressed level.

Beyond the food business, MVC Capital invests in privately held companies, though it's a publicly traded one. Investors rely on the analytical skills of its managers to choose the best opportunities around, and recent results suggest that the Motley Fool Hidden Gems recommendation has been doing just that. Net asset value rose nearly 4% during the quarter to $17.18 a share, as its portfolio of companies continued to perform well. CAPS member marhu has likened it to a "mini mutual fund," while andrew61388 noted at the end of July that its finances looked solid.

Selling for less than book value, strong management, nice dividend

They currently have almost 130,000,000 dollars in cash and short term investments on the balance sheet... with credit markets dried up and the stock market down, they can turn that cash into profitable loans and investments

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. It pays to start your own research on these stocks on Motley Fool CAPS. 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. What's your forecast? Drop by CAPS and tell us which stocks are your favorite contrarian picks.