Let me state upfront that I'm no biblical expert.  When Matthew says in the bible that "the last shall be first, and the first will be last" or, "blessed are the meek, for they will inherit the earth", rest assured I'm not the guy to decipher the message.  But I'm guessing he is referring to humility.  Which isn't a bad thing to possess, especially when dealing with markets.  I learned long ago, "if you don't have humility in the stock market, you haven't been investing long enough".  But I digress.  Let's examine first to last, or last to first.

The stock market can be a perverse place.  It declines at times for no apparent reason.  It can also rise for no reason, although investors and TV talking heads do a good job of creating reasons.  As a wise man once said, "it's a voting machine in the short-term and a weighing machine in the long-term."  Popular, well-known companies can be good investments.  But "popular" companies can also be lousy investments.  And "unpopular" companies with mediocre reputations can be great investments.  How is that possible?  I won't keep you in suspense.  The price you pay can be the great equalizer.

Some stock market studies have shown that at times the "best" companies are not always the very best investments.  A recent Barron's article (The Trader, April 11, 2015) demonstrated this perverse outcome.  The data revealed that the highest analyst-rated stocks had an average return of 9.5% per year.  The lowest rated stocks?  13.2% per year.  That's a whopper of a difference.  How can this be?

Simple.  Wall Street analysts carry lots of weight with investors.  Analysts are well-paid and like their jobs.  And want to keep them.  So, the safe bet for an analyst is to recommend-drum roll please-a relatively uncontroversial stock.   So analysts, being human, and also needing to pay the bills, tend to recommend a company when the skies are clear.  Sales are up.  Earnings are good.  The CEO is being lauded for brilliant moves.  He or she is on the cover of Barron's, Fortune or Forbes.  Trouble is, by that time the stock valuation could be in the stratosphere and future appreciation potential has gone bye-bye.  A "good" company just became a "bad" investment.  See "Dot-com bubble" on Wikipedia.org for the ugly details.

The opposite also occurs.  Since analysts don't like to stick out their analytical necks and risk the unemployment line, "troubled businesses" with temporary problems can be toxic waste.  They avoid these companies like the Black Death Plague (1346-1353) as long as problems persist.   And what do the low analyst ratings lead to?  Why, a fertile combination of investor hate, disgust and neglect, which can create undervaluation.  A "bad" company just became a "good" investment.