Tips -- as any good investor knows -- are best left for waiters. Ideas, however, are the lifeblood of any dedicated stock picker.
So where do ideas come from? Well, besides the stock-idea fairy, they come from a variety of sources such as stock screens and financial news sites. You can also add The Motley Fool's CAPS service to the list. Among the many great features on CAPS is the Stock of the Day -- which serves up a new stock idea to CAPS players on a daily basis.
It works like this: CAPS members create a portfolio by rating some of their favorite (and least favorite) stocks. The super-secret Stock of the Day algorithm is then run. It churns out highly rated stocks for each player based largely on their prior selections and the phase of the moon.
Here are the five recommendations the CAPS supercomputer spit out for me last week:
Day |
Stock |
Market Capitalization |
CAPS Rating (out of 5) |
---|---|---|---|
Monday |
National Atlantic Holdings |
$65.4 million |
*** |
Tuesday |
Verenex Energy |
$432.0 million |
**** |
Wednesday |
State Auto Financial |
$1.1 billion |
**** |
Thursday |
Whiting Petroleum |
$2.4 billion |
**** |
Friday |
Transocean |
$36.6 billion |
***** |
As smart as the CAPS Stock of the Day algorithm may be, it's still just an algorithm, so be sure to look before you leap on any of its suggestions. With that in mind, I thought I'd kick you off with some thoughts on these ideas.
National Atlantic
As we saw in Berkshire Hathaway's
State Auto
CAPS players have been drawn in by the low price for State Auto, but it is in a very similar situation, as it has been feeling the pinch from lower prices and more competition. State Auto's third quarter was still well in the black, but the GAAP-basis combined ratio crept up to 98% during the quarter compared to 91% the prior year. However, State Auto is a much larger insurer and has proved its mettle over a long history as a publicly held insurer.
Transocean
It certainly doesn't hurt this driller that the price of oil has been on a seemingly unstoppable upward charge. And now that its merger with GlobalSantaFe
But now for the real question: Are you getting your own CAPS Stock of the Day selections? If not, what are you waiting for? CAPS is free, and getting your Stock of the Day picks is much more fun than having me get California's Governator to track you down and give you a wedgie. And don't think I won't do it ...
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