Stocks I Love From Companies I Hate

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I think I should do a Ph.D. thesis on the correlation between companies that drive consumers crazy and stock returns. For me, it seems like the more I hate paying a bill, the better a company does.

But maybe I shouldn't be surprised by such a revelation, because needing a company does have a correlation to profits. Warren Buffett called it a "competitive moat," but it's really just a power over consumers that we can't break free from. Whether we want to get rid of them or not, they just won't go away.

Here are three companies I can't stand, with stocks that are very compelling.

Microsoft (NAS: MSFT)
I've been an admitted convert to everything Apple (NAS: AAPL) for the last three years, and I can tell you I don't miss Microsoft at all. But even now, Microsoft haunts my daily life.

Microsoft is nice enough to make Office for Mac but mean enough to leave me unable to use all of its features correctly on a Mac.

A Microsoft database product I use every day lets me access pages but not upload files unless I'm using Internet Explorer. And IE9 is only available for Windows Vista and Windows 7, thank you very much.

As much as I can't stand Microsoft, I love it as an investment. The stock trades at under 10 times trailing earnings, pays a 3.1% dividend, and still has an incredible $39.5 billion of cash and short-term investments net of long-term debt. And my comments above show just how wide Microsoft's competitive moat is. Even with all of Apple's success, it isn't about to dethrone Microsoft as the maker of the go-to operating system for businesses and most consumers.

Comcast (NAS: CMCSA)
There's nothing I loathe more than paying Comcast $100 every month for cable and Internet. Xfinity has been a huge disappointment that made my TV look older than it was before the "upgrade."

But what option do I have? For Internet, a 3G or 4G hotspot from Verizon or AT&T (NYS: T) ends up being more costly for those of us who live on the Internet, because bandwidth is limited and service is slower.

I would love to drop cable TV, but Netflix (NAS: NFLX) doesn't have enough streaming content to make that a reality, and other online sources only have limited content. Watching sports without cable? Forget about it.

So I'm stuck. Where I live, Comcast is my only cable option, and I can't live (maybe a slight exaggeration) without Internet and sports. And that's exactly what makes a great investment. I think that despite some recent cord-cutting, people will still rely on cable companies in the long run for television and Internet access. We're still years away from having the kind of wireless bandwidth needed to eliminate them all together.

Crocs (NAS: CROX)
If you wear the classic Crocs when in public with your children, there's only one thing I know for certain. They're embarrassed to be seen with you.

Crocs have quickly moved from cute and fashionable to "Dad, are you seriously wearing those with shorts and socks?"

But as crazy as I think the Crocs fad is, the stock has never been better, climbing 62% so far in 2011 and 114% over the past year. The company's sales have grown at a 35% clip over the past five years, shares trade at a reasonable 16 times forward earnings, and the shoemaker is updating its lineup with new styles.

I'm more of a Nike or Under Armour (NYS: UA) guy myself, but based on those three metrics, Crocs looks like a better buy than both.

I don't understand Crocs, I may never wear Crocs, but it's tough to say the stock is a bad buy right now.

I'm left scratching my head
Sometimes stocks just don't make any sense. The companies we love to hate may be just the investments we need to make.

What stock do you love from a company you can't stand? Leave your pick in our comments section below.

At the time this article was published Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.The Motley Fool owns shares of Apple, Under Armour, and Microsoft. Motley Fool newsletter services have recommended buying shares of Under Armour, Nike, Apple, AT&T, Netflix, and Microsoft, as well as creating bull call spread positions on Microsoft and Apple, a diagonal call position on Nike, and a bear put spread position on Netflix. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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