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When investing in the stock market, it pays to be skeptical. 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, I'm looking at a different breed of contrarian: MSN CAPS "skeptics." They are willing to see both the upside and downside of a stock.
While their opinions tend toward the pessimistic, 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's a short list of top-rated stocks recently endorsed by prominent CAPS skeptics.
| Company | Industry | Wednesday's open | Skeptic | Player rating (as of Feb. 12) |
|---|---|---|---|---|
Scientific and technical instruments | $41.54 | "madnessmmmrs" | 99.94 | |
Property and casualty insurance | $35.00 | "tenmiles" | 99.93 | |
Construction | $37.50 | "mavericktrading" | 99.72 | |
Industrial ceramics and components | $47.50 | "HonestK" | 99.64 | |
Semiconductors | $26.20 | "tcss007" | 98.69 |
Just as a list of their worst stocks would not be a list of stocks to short, the skeptics' favorites aren't automatic buys. But they do offer an excellent starting place for research.
The manufacturers of the graphics cards that make computer gaming seamless and smooth are heating up more than the games (and computers) themselves. Advanced Micro Devices (AMD, news, msgs) has recently released ATI Radeon 3870 X2, a processor that has at least temporarily stolen the title of "fastest graphics card around." But rival Nvidia (NVDA, news, msgs) has two new cards coming out that are expected to challenge Radeon for supremacy.
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More than 2,000 CAPS players have rated the graphics-processor maker, with nearly 96% of them thinking Nvidia will outperform the market. Intel, in contrast, has the backing of 91% of its CAPS raters, while AMD has just 79% approval from its raters.
If sales of Nintendo's (NTDOY, news, msgs) Wii are any indication, the gaming industry still has plenty of room to run -- even with the prospect of looming recession. And as gaming goes, so goes Nvidia.
Stock Chart (Year)
Nvidia
Fellow CAPS player "ronenm" agrees, pointing out that the younger generation seemingly has greater interest in gaming than in other forms of entertainment.
What's your view? Drop by CAPS and tell us which stocks are your favorite contrarian picks.
This article was reported and written by Rich Duprey for The Motley Fool. At the time of publication, he owned shares of Intel but none of the other companies mentioned.
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