Short-sellers and hedge funds may be shadowy, but sometimes they are the smartest guys in the room. They've done their homework, and they're willing to bet their capital against the crowd -- an investing strategy that can be as lucrative as it is contrarian.
On Motley Fool CAPS, we've also got leading analysts who find the chinks in a company's armor and correctly call its fall. Our "Underdogs" have earned 100 or more CAPS points by correctly predicting that one or more stocks would underperform the market.
Let's look at some of the recent calls these All-Star investors have made. Instead of studying more of their pessimistic picks, we'll focus on the stocks these top members expect will outperform the market. If these CAPS investors have scored big by correctly predicting which stocks will fall, it may be worth our while to see which others they think will succeed.
|
Underdog |
Company |
||
|---|---|---|---|
|
100.00 |
Merck |
**** |
|
|
100.00 |
FormFactor |
***** |
|
|
100.00 |
Reddy Ice Holdings |
*** |
|
|
100.00 |
AT&T |
*** |
|
|
99.99 |
Zhongpin |
***** |
Not every short sale goes as planned, making shorting a risky proposition. Stock prices can be irrational longer than you have money to stay in the game. So don't use this as a list of stocks to sell or buy -- just the launching pad for further research.
Underdogs still wag their tails
Although AT&T enjoyed the fruits of the iPhone's popularity, which has allowed it to take customers from Verizon
They might just be right about that, too. You'd probably use the tablet in a home setting or some other place with available Wi-Fi coverage, so tacking yet another $30-a-month subscription fee onto your monthly bills isn't likely to be a prime mover here.
Yet CAPS member Manders001 figures that even if iPad users do latch onto its network, Apple and AT&T have become so intertwined that the wireless carrier will still benefit in the end:
I already picked AAPL as a good pick, and AT&T is in cahoots with them for part of their business. The iPhone and iPad use AT&T for their remote connection. This equals more subscribers to the AT&T services because of it. AT&T also is becoming a mass communications giant. LAN line phone, cell phone, Internet/DSL and now TV are all available over the AT&T networks in most areas. With the launch of UVerse, they have now entered the visual entertainment area. I see AT&T being a strong company for many years.
Head over to the AT&T CAPS page and deposit your opinion on whether it will continue to make the connection with consumers.
As the worm turns
Since we're at the start of a turn in the semiconductor cycle, we'll be witnessing a ramp-up in demand for chips that power the goods consumers want. That can only mean that wafer test equipment maker FormFactor is going to see an upswing in demand for its technology, and that could be behind management's guidance that this will be the year it returns to growth.
CAPS All-Star tenmiles, who this week picked FormFactor to excel, has a two-year horizon for the investment to work out, though the intervening time could provide for trading opportunities:
Been off form of late after disappointing first quarter.
Management believes breakeven by Q3; debt free with large cash cushion - buyer at $16.45 with two year horizon, although trading history suggests likely opportunity to trade out profitably before then from current levels.
FormFactor remains an investor favorite with 98% of the more than 1,300 CAPS members who have rated it picking it to outperform the market averages. Go to the FormFactor CAPS page to test your opinion on whether this is the start of a new semiconductor cycle that will spring this specialist into action.
There's no need to fear ...
Underdogs often shine brightest with their backs against the wall. Still, it takes more than a few All-Star picks and a quick paragraph to make buy or sell decisions. Start your own research on these stocks on Motley Fool CAPS where your opinion can still save the day. While there, you can 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.
