Here at the Fool, we always encourage our readers to listen carefully to both sides of any stock story -- the bull case and the bear case. That way, investors have the very best chance to make informed and objective decisions.

That kind of philosophy inspired the creation of our Dueling Fools column and our award-winning discussion boards. It's even started a few Foolish fights.

So with that in mind, I'm going to highlight two closely contested "investment debates" taking place over in our Motley Fool CAPS community. Unlike a stock such as Atheros Communications (NASDAQ:ATHR) which enjoys lopsided support from the bulls, the stocks I highlight here also have their fair share of bearish detractors.

The great stock debates
So, without further ado, this week's two stock skirmishes involve:

Company

CAPS Rating

Bulls

Bears

Blockbuster (NYSE:BBI)

*

238

276

Pacific Ethanol (NASDAQ:PEIX)

*

185

112


Blockbuster of a battle
Bipolar stocks like Blockbuster are some of my favorite ones to research. When the pros and cons of a stock are clearly laid out by our community, you can figure out -- in a much more efficient manner -- which angles are smart enough to play.

For example, the general sentiment out of the bull camp is that Blockbuster's latest restructuring efforts, its newly introduced Total Access program (which serves as a faster exchange alternative to rival Netflix), and its established brick-and-mortar stores make the stock a well-calculated turnaround bet.

Here are a few CAPS All-Stars who've made it a Blockbuster night:

  • prose976: "Financials are bad right now, but company is consolidating, offering a more value-driven service than Netflix and competitors (BBI has video games) and equal or better selection, delivery times and ease-of-use services online and in stores than competitors."

  • tgr4fun: "With the introduction of their new Total Access, I believe BBI has finally figured out how to combine the internet and stores to their advantage."

  • highbury11: "Undervalued, underappreciated. Carl Icahn is a large stakeholder. Probably worth 11-12 dollars."

Yet despite those arguments, many bears in our community cite the demise of the brick-and-mortar model, poor economic feasibility of Total Access, and a debt-ridden balance sheet as some of the reasons to stay away from Blockbuster's shares.

Listed below is some of the criticism that bearish CAPS All-Stars have thrown in the company's direction:

  • investorpoet: "Despite the better cash flow from closing some stores in 2006, Blockbuster will not be able to stay in the black in 2007. Total Access will be a total cash drain for the company. Not quite ready to call bankruptcy on this company, but break-even is about all they can hope for in '07."

  • PopsDaniecki: "Video stores in brick and mortar are a dinosaur just waiting for that final meteor. Everything I watch/listen to/or read comes over an internet connection. TV, Movies, Radio, News. Everything."

  • brentvoss: "Business in decline. A victim of technological change in an ultra-competitive market."

So who do you agree with? I'm siding with the bears on this one, under the belief that Total Access -- though a nice way to generate some in-store traffic -- will always be a cash-draining proposition.

Of course, if you think I'm a blockhead, buster, and believe that a turnaround is imminent, then give Blockbuster an outperform rating here. Only time -- and CAPS -- will tell us who's right.

Ethanol-fueled fight
One more bipolar stock on which our CAPS community can't seem to agree is Pacific Ethanol, a Fresno-based producer of renewable fuels.

Pacific Ethanol's bullish boosters assert that its well-entrenched position in the Western markets, its expertise in the treatment of distillers grain, and the backing of Bill Gates' Cascade Investments LLC provide a smart way for investors to profit from the emergence of alternative fuels.

Here are a few CAPS residents waxing optimistic about Pacific Ethanol's prospects:

  • KozmoKramer: "PEIX is one of the leading Ethanol producers in the US. There's potential to get in on Ethanol right now, since it's still new to the US, but in a few years, this could all change with alternative fuels and oil supplies."

  • goldguru: "Pacific Ethanol. Not the $40 stock that hype inflated it to, but ethanol has a place as an MTBE (methy tertiary-butyl ether) replacement and this stock should be sitting north of $20."

  • lsxwcm: "Bill Gates owns a big chunk. What more do you want to know?"

But of course, this wouldn't be much of a stock battle if the entire picture were rosy. Plenty of bears consider Pacific Ethanol's investment merits downright ugly. They cite low barriers of entry, eroding margins, and the questionable viability of ethanol as fairly serious (and obvious) red flags.

I'll leave it to TMFEldrehad, the highest-rated player in CAPS, to chime in with his bearish reasoning:

  • "Fact: It takes almost as much energy to produce ethanol as is harvested when it's eventually combusted, meaning that switching to ethanol will actually *increase* our overall energy needs.
  • "Fact: There aren't any meaningful barriers to entry -- meaning that even if ethanol does prove viable (which I doubt given the facts above) the surviving players will be locked in a brutal price war.
  • "I know there are a lot of people who think we need to more fully explore alternative energy solutions, and I think it's a good idea too, but the economics of ethanol, from top to bottom, just plain stink."

So, what's your take on this stock debate? I'd have to agree with the bears once again, since I think the fundamentals of the ethanol industry are just too inadequate to take a chance on.

Again, if you think I'm being way too bearish for my own good, go right ahead and take a run with the ethanol-charged bulls. CAPS will let us know who's getting the best of this bet over time.

Voice your opinion, Fool.There you have it. The competition regarding these two stocks will only get more intense over time and probably needs an investor like you to finally tip the scales in one direction.

Be sure to join us next week, when I'll feature two more rip-roaring investment battles. Until then, feel free to confront any bulls, bears, pigs, or funny Fools along the way.

Fool contributor Brian Pacampara has never won a debate against his 3-year old nephew and holds no position in any of the companies mentioned. Atheros is a Hidden Gems pick. Netflix is a Stock Advisor choice. The Fool's disclosure policy always communicates the proper information.