Stocks Everyone Says to Buy Now

Some stocks simply have such great potential that "everyone" knows they are a good buy today. Yeah, we wish.

If we had known that Hansen Natural would return more than 25,000% over the past decade, not only would we have mortgaged the house on it, we'd have mortgaged your house, too!

In fact, if investing were so easy, we'd all be millionaires. It's easy to see after the fact which companies have been winning investments. What we need is a way to know which companies will grow hundreds of times in value over the years. But there hasn't been a way.

Until now, that is.

More than 75,000 professional and novice investors have rated stocks on Motley Fool CAPS, and we can check in on their opinions about which stocks will beat the market and which will lose to it. While it's often a tug-of-war between the bulls and the bears, we've identified dozens of stocks that members of CAPS have unanimously chosen to outperform the market.

That's no small feat. Thousands upon thousands of companies have been rated, and convincing arguments can, and are, made on both sides. For example, Motley Fool Stock Advisor recommendation Nintendo (OTC BB: NTDOY.PK) is a well-respected, top-rated stock with more than 1,250 CAPS investors rating the company. Yet while nearly all of them think the stock will beat the market, there are still almost a dozen CAPS investors who don't.

So when you come across a stock that everyone thinks will outperform, you've got something special, and we as investors ought to take notice.

Here are a handful of those "obvious" investments.

Company

Bulls

All-Star Bulls

Price

Return on Capital, TTM*

Dorman Products (NASDAQ:DORM)

37

17

$13.99

11.6%

O'Reilly Automotive (NASDAQ:ORLY)

99

18

$31.00

12.4%

Industrias Bachoco (NYSE:IBA)

88

30

$28.20

7.9%

Patriot Capital Funding (NASDAQ:PCAP)

58

20

$11.12

6.1%

SL Industries (NYSE:SLI)

28

13

$18.85

14.8%

Sources: Motley Fool CAPS, Yahoo! Finance, and Capital IQ, a division of Standard & Poor's. Price reflects Wednesday's close. *Trailing 12 months. 

As always, none of the companies on this list should be considered formal recommendations, but rather starting points for further research. What we've done is narrow your workload by focusing on the companies CAPS investors are expecting to beat the market.

Lighting up South America
O'Reilly Automotive is what you could call, in the Peter Lynch tradition, a "boring stock." It operates in the very unsexy industry of auto parts, which has been unkind to rivals Pep Boys (NYSE: PBY  ) and more recently AutoZone (NYSE: AZO  ) . While O'Reilly is the fourth-largest after-market parts company and is about breakeven with its year-ago price, CAPS investors see the stability of the industry as positive for future growth.

Industry researchers and analysts at Netscribes note that O'Reilly's profit margins tend to exceed those of its rivals and its focus on professional mechanics (as weekend warriors) gives it lower risk:

It is a fact that vehicle maintenance is done out of necessity, rather than by choice. Therefore, during economic downturns, as seen in the previous quarter, most customers defer maintenance of their vehicles. This postponement of repair and maintenance should materialize in the quarters ahead. Additionally, factors like increasing number of cars coming off warranty period coupled with a decline in gasoline price, as projected by Energy Information Administration, will aid the company to boost its performance.

The company's top line has seen a growing trend. Even in the challenging economic environment that the company witnessed in the previous quarter, which eroded the consumer spending power, it was able to generate a respectable rise of 10% backed by rise in comparable store sales. It is also noteworthy that the profit margins of O'Reilly are higher as compared to its peers. Moreover, owing to favorable product mix and better purchasing power, gross margins are also witnessing a healthy rise.

In addition to financials, factors like rising average age of cars, which currently hovers around 9.5 years, increasing number of vehicles on road, declining trend of new car sales and the ascendance of total number of miles driven annually to 3 trillion shows a favorable sign for the company, and surely will aid O'Reilly in future.

You can read the full review by Netscribes, along with the thoughts of other CAPS players, by clicking here.

Let's hear from you
How about your take on these or other "obvious" winning investments? If you want to add your two cents, sign up to join the Motley Fool CAPS community, which is 100% free.


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