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 downside of a stock. While their often negative opinions peg them as "skeptics," their top CAPS 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:
|
Company |
CAPS Rating (out of 5) |
Skeptic | |
|---|---|---|---|
|
Allied Irish Banks (NYSE:AIB) |
***** |
95.71 | |
|
CVS Caremark (NYSE:CVS) |
**** |
99.98 | |
|
Goldman Sachs (NYSE:GS) |
*** |
99.97 | |
|
Natus Medical (NASDAQ:BABY) |
***** |
99.87 | |
|
Pengrowth Energy (NYSE:PGH) |
**** |
94.77 |
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 an automatic buy list. But they do offer an excellent starting place for your own research of extreme buying opportunities.
Inquiring minds want to know
It's tempting to think that if Warren Buffett's Berkshire Hathaway (NYSE:BRK-A) is buying Goldman Sachs, then you should, too. In addition to the bad politics of buying an investment house and then advocating for a government bailout that would significantly assist him in making a profit, Buffett also got terms that simply aren't available to the likes of you and me. As F. Scott Fitzgerald once said, "The rich are different from you and me."
Yet CAPS member dcrollins believes that Goldman is changing to bank status in name only, but will still have the same top-notch employees who made it the force in investment banking:
The bailout will bog down, but it won't matter. They are a BINO "bank in name only" and are best poised to avoid the deleveraging that is required within two years... They still have the best talent on the street.
It used to be that getting away to the warmer climes of various western states was a prescription for what ails you. Apparently that's the thinking going on between CVS Caremark and Walgreen (NYSE:WAG), which are bidding for the right to acquire Western drugstore operator Longs Drug Stores. With Longs rejecting Walgreen’s superior $75-a-share bid, it may take its offer directly to shareholders. That could be a problem for CVS, which has thus far only had only 4% of Longs' shares tendered.
CAPS All-Star TMFHelical sees CVS as something of an innovator, with its construction of clinics adjacent to its pharmacies as a potential winning move:
Great entry point on this recession resistant foundation stock. Embracing the new paradigm of adjacent clinics will pay off for this company as well.
Acknowledging the frustration a stock's volatility can bring to bear, CAPS member blackjacky2k lays out six reasons why he finds Pengrowth Energy a solid investment. Here are three of them:
without going into length about each reason. (to most of you, these might be old news)
1. peak oil
...
3. huge dividends, excellent for reinvesting and dca
4. yet to happen us dollar crisis-the way us prints its own monopoly money, it will be worth a lot less in a few years. people will flock to oil and commodities once again.
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.
On Oct. 7, 2008, Fool co-founder David Gardner and his Motley Fool Pro team will invest $1 million in a portfolio designed to help you make money in any market. In the coming weeks, the team, relying heavily on proprietary CAPS "community intelligence" data, will establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds (ETFs). To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.
