Stockpickr: The Top Contrarian Plays

In his latest book, Mad Money: Watch TV, Get Rich, Jim Cramer describes a strategy he likes to pursue -- doing the opposite of what Wall Street analysts are doing, specifically if a stock is moving conversely to analysts' ratings.

For instance, if analysts have a sell rating on a stock but the stock is up 50% off of its lows, then it's a good time to buy.

How come? As Jim says in the book, the analysts "are bad at admitting mistakes." Once proven wrong, they will "hide their shame for getting it wrong." And this is how he games the moment when analysts start upgrading.

On Stockpickr, we've set up an analyst contrarian portfolio. The stocks in this portfolio all have sell ratings on them and are significantly off of their lows.

I also looked for criteria that make the stocks buyout candidates, such as increasing cash flows and low multiples of market cap over cash flows.

One such name is American Eagle Outfitters(AEOS Quote). This name is really unloved.

Investment bank Thomas Weisel initiated coverage of American Eagle last week with an underweight rating. Citigroup downgraded the stock in October of last year from hold to sell, followed by UBS changing its rating from buy to neutral.

It seems to me that the 11th circle of Wall Street hell is everyone simply thinking your stock is "neutral."

However, American Eagle's stock has consistently proven the critics wrong over the past year.

The stock trades for just 10 times cash flows, making it a potential buyout candidate as well. The company has a market cap of $7.3 billion and net cash of over $800 million sitting in the bank, giving it an enterprise value of just $6.46 billion. The $627 million in cash flows makes this a cheap stock.

American Eagle Outfitters (AEOS)