5 Stocks That Stir Up Investor Emotions

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 |  Includes: AAPL, AMZN, BAC, BBRY, C, CRM, NFLX, ORCL, SIRI
by: Richard Saintvilus

On Wednesday, I told many Sirius XM (NASDAQ:SIRI) bears to just shut up. I just simply grew frustrated of what I had started to realize was a string of constant unfounded banter at the expense of a growing and thriving company – one that has overcome the many obstacles on a course that these same bears themselves have built. I’ve since been told that I had worn my emotions on my sleeve in that particular article – to the extent where I had committed one of the investing cardinal sins.

I’ve always been told that when it comes to the areas of business, investing or even gambling (legally, that is), the participant sees much clearer when they take out the emotion. This has always been something that has proven true time and time again. The reason is simple. When there are critical decisions to be made, factoring personal things that do not immediately impact the bottom line often leads to losses. This is why the famous mafia mantra of the early 20s still lives today - the one that says “it’s not personal, it’s business.” Oh, lest we forget the ever popular, “never mix business with pleasure.”

So when I was told that my article was “overly emotional” it caused me to reflect on how this could have happened – to the extent where I let my guard down. As for my reaction, aside from a slight bit of embarrassment, I simply told a few people that I just had some things that I needed to get off my chest. But Sirius XM as does several other stocks with (dare I say) a “cultish following” has a way of inciting this reaction from its investors. Some call it “obsession” and some call it “passion.” But regardless of how you choose to define it, recently, I’ve been calling it profitable.

Let’s take a look at a few stocks that tend to bring out the same level of passion from its investors for one reason or another.

Company

Ticker

Current Price

Target Price

Apple

(NASDAQ:AAPL)

$421

$550

Research in Motion

(RIMM)

$15

$13

Netflix

(NASDAQ:NFLX)

$92

$110

Bank of America

(NYSE:BAC)

$6.87

$10

Salesforce.Com

(NYSE:CRM)

$105.82

$120

Click to enlarge

Apple

It goes without saying that Apple has some of the most passionate investors on the market – to the extent that they are a direct rival to Sirius XM when it comes to defending their stock. But for one reason or another it seems that Apple investors are always unsatisfied and extremely hard to please. Understandably, Apple’s long history of success has caused many of its investors to become remarkably complacent or even stoic to certain events as if to suggest that that its string of stellar performances have become routine. The only way to generate excitement is to “blow the doors off.” But that’s what the company seems to do anyways.

If not during earnings season when everyone starts to use the words “monster quarter” in every other sentence, Apple’s investors are often discussing how to spend the company’s enormous cash – the thinking continues to be, it has too much of it. To some, this would be a great problem to have, but to several Apple investors, somehow this has been perceived as a big problem that the company must fix. Investors continue to plead with the company to share its cash or buy some something – which it did on Wednesday when it paid $500 million for Israeli company Anobit, which specializes in chips that enhance flash drive performance through signal processing.

So both fans and investors should rejoice and breathe a sigh of relief that the company now has $500 million less in its coffers. So clearly it has heard the cries and normalcy has been restored. But in all seriousness, Apple investors are some of the smartest on the market. The fact of the matter is, they have invested well and evidently appreciates value. As an Apple shareholder myself, I have embraced the community and I appreciate the many that continue to support my articles here on Seeking Alpha.

Research In Motion

A lot has been said about investors in Research In Motion. Most of what has been said recently does not put investors in a good light. But I can say in all fairness, not all of them are true either because at one point, I was a one of them. Passionate and loyal were often the words used to describe not only the company’s investors, but also its customers. At one point not only did RIM dominated the mobile phone market, but many insisted that it put “smart” in smart phone – hence created a new market entirely. The addiction was obvious as its flagship Blackberry device was termed “crackberry” from the compulsion that plagued not only every corporate executive, but also every high school teenager with the need to “stay connected.”

Today, the company is a shell of its former self. Every investor who has decided to “go down with the ship” is likely regretting this decision and now is either looking for a raft or a lifesaver. It goes without saying that 2012 will be a make or break year for the company and investors and fans alike appreciate this reality. The stock surged several percentage points on the news that both co-CEOs had recently been stripped of the title of chairmen and now everyone is wondering what’s next. But I will tell you what is not next. The company will never see a $100 stock again – those days are over.

The reality is, although the stock has seen a slight uptick of late, there remains no guarantee that it will be able to stay above $10. But I can say with a great degree of certainty that it is not going to zero. The company still has a size 18 in what I call the corporate footprint. If RIM is able to execute a scaling down of its operations and focus on services such as its Mobile Fusion I feel it has a puncher’s chance of surviving as a publicly traded company. But as with its passionate investors and fans, it first needs to embrace the reality that its dominance in hardware is over and shall never return.

Netflix

First and foremost, I am a Netflix subscriber and I love the service. The state of the company, or better yet the fate of the company, continues to dominate articles and message boards. Since hitting an intraday bottom of $62.37 on November 30, the stock has surged almost 50% to where it currently sits at $92. This was after many analysts left it for dead. A lot of the gains surround speculation that an acquisition by Amazon.com (NASDAQ:AMZN) is imminent, but the question is, will it hold?

For all of the criticism Netflix receives about its content, I haven’t come across anyone yet who has the service and does not like it. That only means that I don’t know a lot of people because the company had to issue an apology to keep more people from canceling the service after it lost 1 million subscribers last September. The public relations nightmare that it caused several months ago over its recent price increase stirred up a lot of emotion and anger from its customers and frustration from its investors who had to watch the stock drop from its $304 high to its recent low.

It seems the subscriber defections have started to stabilize and it’s beginning to be reflected in the stock price. The question is, how high can it go? The stock is ridiculously high with a forward P/E of close to 200 so there are high expectations, but can it deliver considering how heated the competitive landscape is for its business. Netflix has the benefit of having a great lead in that market – something that any acquirer or competitor will be unable to duplicate. For this reason I expect the discussions of an acquisition to continue.

Bank of America

If Bank of America surprises you here for making this list, you are not alone, it also surprises me. The stock has a volume of 265 million shares that trades on any given day. Not that this constitutes a cult following, but it does imply a high level of interest. Bank of America has taken on the qualities of Citigroup (NYSE:C) before its recent split – a high degree of volatility and loved by both longs and short sellers. I received a rash of negative emails when I turned bearish on the stock after learning that its recent favorable earnings was partly due to the benefit of mark to market accounting.

I received more emails from Bank of America investors on Wednesday, but this time the notes were not littered with four-letter words. It seems that I have made some new friends after my recent article suggesting that I am now considering a long position in the stock. It has caught my attention for having acquired all of the qualities of a stock that has touched bottom. Since reaching a new 52 week low of $4.92 on December 19, the stock has surged 35% to where it rests today. As of this writing it has reached $7.07 in pre-market action.

There is no telling where it will be during regular trading hours, but suffice it to day there is plenty of new optimism in the stock. As investors continue to struggle with assessing its value, there is a faction that will only care that it is going up from here – sometimes, that is just more than enough.

Salesforce.com

I’m not proud to say that Salesforce.com has made me look extremely foolish over the past couple of years – mostly because of how it continues to defy all logic and common sense for its ingenuity and being able to capitalize on bringing customers and businesses together. Well, that’s only part of the reason. The truth is, it has made many analysts look foolish for doubting its ability to grow and justify its enormous P/E. For me, as an Oracle (NASDAQ:ORCL) investor, it brought me much pleasure to dislike one of its main competitors in Salesforce.com, but it also brought me much pain when I tried to short it on the basis of its valuation.

As far as obsessions or even “cultish” goes, I don’t think the company deserves to be among the rankings of Sirius, Apple or even RIM. But it has generated such a following on the stock by a community of analysts because of its perceived expensive valuation. On that note, there are many who are waiting to be proven right. But it is something to watch as the downside risk remains incredible. It only takes one bad quarterly miss to cause the stock a 50% drop or higher in the stock price as its many bulls will want to immediately secure their profits.

Disclosure: I am long SIRI, AAPL, ORCL.