Beazer Homes: Buy the Biggest Dog and Teach It to Run

Sometimes it's best not to buy the top-quality companies. This is one of those times when the worst stock can outpace its peers. It's hard for me to give up on buying companies with the best fundamentals. That's my training. But that's not where the action is. This is a market that loves "junk".

Look at retail. Take the Buckle (BKE) and Chico's (CHS). Back in February, you would have read that BKE had 14% same store sales while CHS's were -13%. So, if you'd bought BKE rather than "dud" CHS, would you have been pleased with the result? No way, CHS tripled in value while BKE underperformed gaining 22%.