Successful investing requires you to think independently and stick to your convictions. That's hard enough with stocks that are generally popular -- after all, in the stock market, there's a seller for every buyer. But it gets even tougher with stocks that don't seem to have good press or bullish investors anywhere. Of course, defying popular opinion has led many contrarian investors to great returns.
In that spirit, I've headed to Motley Fool CAPS to dig up some unloved stocks that have delivered big gains to shareholders over the past month. Our community of investors has put each of these companies on the bottom two rungs of the CAPS rating scale:
|
Stock |
30-day return |
One-year return |
Current CAPS Rating |
|---|---|---|---|
|
American Superconductor |
51.8% |
155.8% |
** |
|
Krispy Kreme Doughnuts |
26.4% |
(50.5%) |
* |
|
USANA Health Sciences |
22.2% |
(38.4%) |
* |
|
Aventine Renewable Energy Holdings |
12.5% |
(66.6%) |
* |
|
THQ |
12.2% |
(36.4%) |
** |
|
Rackable Systems |
11.4% |
11.0% |
** |
|
Borders Group |
11.3% |
(65.6%) |
** |
Data provided by Motley Fool CAPS as of June 11.
Now, given CAPS' knack for accurately gauging winners and losers, I'm not recommending that you run out and buy these stocks. An index set up to short CAPS' least-liked stocks has outperformed 98% of all other CAPS players. That said, CAPS players have proved overly negative on some high-performing stocks. Are any of the stocks in the table above the same sort of undercover rockets?
Providing the pep
We all remember Krispy Kreme, right? Doughnuts that make you want to slap that Dunkin' Donuts guy and -- at least for a while -- growth that was a tasty treat for investors. But then the house crumbled. Though the doughnuts stayed tasty, the growth was faster than it was smart, and the company also ended up getting a house call from the SEC.
But Krispy Kreme is still kicking around and still making those doughnuts. And on Monday, it whipped up a sweet batch of earnings. The company has been plagued by losses for years, thanks largely to high operating costs, spending on restructuring, and legal settlements, but it managed to report positive earnings for its first quarter. Though revenue for the quarter was down 7% from the prior year, the $4 million profit was a welcome change from the $7 million loss in the same quarter last year.
Investors found the news pretty darn appetizing and sent Krispy Kreme's stock up 14% Monday.
Combing CAPS
Profit or not, CAPS players do not appear ready to get back on the Krispy Kreme bandwagon quite yet. There are 349 Krispy Kreme bears on CAPS versus just 306 players who are positive about the stock, putting it solidly at rock-bottom, one-star status.
Earlier this month, CAPS player thegrimbo gave the stock a thumbs-up and noted that "this company used to be one of the greatest donut companies in the world, until mismanagement caused it to somehow go under. It looks like Krispy Kreme is in a position to get back to the glory they once held."
thegrimbo's optimism, though, is solidly in the minority. CAPS All-Star VRYFoolish gave a good summation of the bearish position when he posted his tongue-in-cheek underperform pitch back in September of last year:
My name is Krispy Kreme... I offer only one product and I oversaturated the market with it. Now all of my locations compete with one another and I will soon be bankrupt. Moreover, I have negative revenue and I don't make a profit... Will you invest in me?
So what's your take? Is there good reason to get more bullish on Krispy Kreme right now, or are its sunnier days numbered? Head over to CAPS and let the community of more than 105,000 investors know what you think. While you're there, you can start your research on any of the other stocks listed above -- or any of the 5,700-plus stocks on CAPS.
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