Contrarian Shopping List

"We simply attempt to be fearful when others are greedy and to be greedy only when others are fearful." -- Warren Buffett

Out of the quadrillions of quotations quarried from that most loquacious of quotationists, this one holds a special place in the hearts of Foolish investors. Are you looking to "buy low" so as to later "sell high"? If so, your best chance of getting that initial, low entry price comes when panicked sellers are unloading their shares at whatever price is on offer.

In today's column, we search the ranks of Wall Street's motivated sellers and note which stocks they're most frantic to unload. Therein may lie the makings of a contrarian investor's shopping list. But don't just take my word for it. Before you decide to go in through Wall Street's out door, check your thinking against the collective intelligence of Motley Fool CAPS investors.

Today's contenders include:

The problem with pessimism
The problem with going against the grain on Wall Street is that when professional traders get pessimistic, their grim outlook can become a self-fulfilling prophecy -- at least in the short term. The more desperate institutions become to unload a stock, the lower the price they'll accept to get rid of it. And as their "ask" prices drop, the "bid" prices of buyers will fall in tandem, creating the very price decline that they feared in the first place.

Until the selling stops.

Shoppers, start your engines
When it will stop is anybody's guess. But until it does, savvy investors have a chance to "get greedy" and snap up some bargains from these fearful sellers (if bargains they truly be). Which of the above stocks fits the bill? Surprisingly, today's list is chock-full of potential winners. While CAPS investors generally agree with the wing-tip-and-pinstripe crowd on the bleak prospects of JetBlue, LaserCard, and XM Satellite Radio, they're willing to give Lam a break -- and they're positively ebullient on three nominees from today's list. Let's pull a couple of pertinent quotes from the pitches tendered on each:

On ExpressJet:

• obiwankenobe1250 observes: "This little airline turns a profit consistently, something laudable in their very competitive and challenging industry. Must be run by some very bright people. Just a speculative play on a hunch, beyond that."

On SimpleTech:

• 12bagger gives us some background on what's been going on with the stock, which "was pumped up in December after being featured in IBD 'New America' column, only to take a direct hit from "the big stink bomb that James Cramer set off in technology-land [in January]." 12bagger believes "the bi-directional hype was self-cancelling," and sticking to the fundamentals, notes that SI sports: "good growth, not too steep a PE (if you believe analysts' estimates), strong balance sheet, lots of insider ownership."

On Silicon Image:

• ChipGeek describes SI as "a play on the continued success and growth of the HDMI standard. This company stands to benefit from several different growth drivers: the growth of the consumer electronics HD craze (HD DVD, BluRay, etc), the growth of the media-rich PC, and the growth of protected digital content in the home."

If you're surprised at the quality of analysis these guys can stuff into a couple of dozen words -- well, you shouldn't be. Each of these investors proudly wears the title of "CAPS All-Star" and boasts a combined rating that's better than 80% of the overall CAPS population -- and better than several name-brand investment banks. When All-Stars speak, smart investors listen.

Think you have what it takes to join their ranks? Well, log on to CAPS now and prove it. Pick any company from the above list and tell us whether you think it will outperform or underperform the market -- and why.

Motley Fool CAPS: It's fun, it's free, and it just might make you famous.

Fool contributor Rich Smith has never flown ExpressJet, never quite understood what flash memory does, and thinks silicon is best used for building sand castles. He earned his CAPS ranking (currently 43rd out of more than 22,000 raters) by sticking to companies he knows well, and does not own shares of any company named above. JetBlue is a Motley Fool Stock Advisor pick, and XM is a former Rule Breakers selection. The Fool's disclosure policy is never contrary.