Investing in Your Backyard: Northern New England

Break out the lobster and beans -- it's a backyard investing barbecue, right outside Beantown!

There are many good reasons for researching investment opportunities in a certain geographic area. Today, we're looking at the northerly parts of New England, meaning Maine, New Hampshire, and Vermont. (Get over it, guys -- it's at least as valid a theme as "Gwen Stefani's favorite songs.")

We're skipping the hustle and bustle of the New England metropolises to take a stroll in the unspoiled countryside. With nicknames speaking of granite, pine trees, and green mountains, we might expect a slower pace in the local business districts.

If you happen to live in Concord or Burlington, you already have a few advantages when it comes to evaluating the local market, such as access to local news sources and the word on the street, and a high probability of being a customer or employee of these companies. And if you're not a local resident, you might still want to know the details of the business climate -- the area could be chock-full of undiscovered treasures on their way to greatness.

Without further ado, here are the largest companies headquartered between Madawaska and Bennington:

The largest company in the tri-state area is a majority-owned subsidiary of Canadian banking giant Toronto Dominion, with headquarters in Portland, Maine. Our CAPS players don't have a whole lot to say about the company, which is understandable given that the mother company has decided to buy the rest of the outstanding shares. Banknorth is currently closing branches and cutting about 400 employees loose, all in the name of tightening up operational costs.

Energy East is another stock with few vocal CAPS followers. The nor'easter electricity and natural gas utility, which operates out of offices in New Gloucester, Maine, miles away from any major municipality, does get the nod from a couple of players who like the stock's steady price and generous 4.9% annual dividend yield. However, East has almost as many enemies as friends among our fellow Fools -- it's just that they're not talking about it.

Moving right along, there's a bona fide five-star stock in the suburbs of Portland, Maine. This veterinary diagnostics and food-safety testing specialist has a friend in CAPS player amassafortune: "IDEXX Labs is already a solidly managed company with solid results. It will continue to do well as boomers replace children with pampered pets."

Fairchild Semi is another woefully underfollowed stock, even in our 25,000-investor CAPS community. It's also another Portland-based business. Looking at the few comments we do have, it seems that some of us don't see the difference between the processors that power our computers and Fairchild's power regulator products.

Footwear and apparel maker Timberland provides a refreshing change of pace on several levels. It's a New Hampshire company, so we're finally out of Maine. More to the point, Timberland has provoked reactions out of 78 CAPS players so far, and 16 of them have written up their opinions. Our very own Foolish founding brother David Gardner (TMFBreakerDave in CAPS) is one of them:

"Free cash flow for 2006 more than cut in half from the previous few years, down to $75 million from $150m+. That includes both lower net income AND (double-whammy) higher capital expenditures. Implication is brand is getting tired and/or the old stuff ain't movin' as well as it once did." Needless to say, Dave thinks Timberland will underperform the market for a while.

Where's my Phish?
Below the top five, there's the usual assortment of regional banks and various local utility companies, most of the really, really tiny variety. The Foolish newsletters haven't picked any stocks from these states yet, though highly rated issues like IDEXX and New Hampshire-based e-learning expert SkillSoft (NASDAQ:SKIL) might stand a chance one of these days.

Other household names in the area include Green Mountain Coffee Roasters (NASDAQ:GMCR) (a Vermont operation, naturally) and New Hampshire computer system reseller PC Connection. But fully 14 of the 37 companies I found here are currently too small to receive CAPS votes, and only 13 have received enough ratings to earn a star grade. In other words, very few investors know anything about these businesses.

You can see that as a sign of weakness, or you can take it as a challenge and an opportunity. Maybe you'll be the one who shows us how one of these micro caps in the windswept hills will change the world. That's what CAPS can do for us.

These thin coverage figures make sense, though. We're not talking about a major financial hub here, or another Silicon Valley. Vermont provides 25% of the nation's maple syrup supply but has the lowest gross state product in the union. New Hampshire ranks just a few notches north of its neighbor on that ladder, and the shipyards in Maine built many of the Navy's great warships, but the paper mills that used to fuel its economy have largely moved away or shut down.

So it takes patience and dedication to dig up the treasures here -- or firsthand knowledge of the local business market. That's akin to the Central Florida situation, albeit in a very different meteorological climate.

Do you agree? Disagree? Feel free to weigh in on the northern New England market -- or on any stocks at all, really -- by joining Motley Fool CAPS and blasting away with your ratings and commentary pitches. And if Bangor isn't your 'hood, maybe we'll come around where you live the next time.

For further Foolishness:

• Timberland Tied Up: Fool by Numbers
• Investing in Your Backyard: Kansas City
• Investing in Your Backyard: Michigan

Think you can pitch your favorite stock -- or ditch your least favorite one -- in 27 seconds or less? That's just what we're doing over at Motley Fool CAPS! Come check out our new 27-second stock pitches.

Fool contributor Anders Bylund holds no position in any of the companies discussed here, but he'll happily take a cup of Finca Dos Marias, thank you very much. Yes, he is a major coffee geek. You can check out Anders' holdings if you like. Foolish disclosure is always red-hot.