Beat This Stock!

A basketball or baseball game has only one winner, but investing offers many roads toward profits. We don't need to find the "best" stock year after year to secure our financial future -- we just need to find really good stocks, really consistently. The collective intelligence of the 81,000-plus investors in Motley Fool CAPS  makes that task easier than ever.

For every highly rated stock on CAPS -- like five-star-rated gaming operator GigaMedia (Nasdaq: GIGM) -- there's an even better stock above it in the rankings. Just look for the "Beat This Stock!" button in the top right corner of each stock's CAPS page. Click that button often enough, and you'll climb the CAPS ladder toward the stock rated No. 1 by the service. Along the way, you'll gain a handful of stock ideas that might help you beat the market by an even wider margin than your favorite company.

So who ranks better than the Motley Fool Global Gains selection? Below are seven stocks that ranked higher in the opinion of CAPS' investors than GigaMedia. CAPS is a dynamic service, so while these were the companies generated this morning, the list may be different for you:

This is obviously not a list of stocks to buy. It should instead be a springboard for your own due diligence. Still, let's examine some of the reasons why CAPS investors think these companies' returns will beat GigaMedia and the market.

A shocking display of diversity
When you go shopping at Home Depot (NYSE: HD) and purchase its store brand, Rigid, you probably don't realize that many of the products are actually made by Emerson Electric. Undoubtedly it's the same scenario with your purchase of ClosetMaid shelving, that motor running your Whirlpool (NYSE: WHR) washing machine, or the compressors pumping the air conditioning systems made by Carrier, Lennox, Rheem, or Trane. Emerson either owns them outright or makes the components that power them.

The range of products marks it as a leader, which has opened the opportunity for it to increase prices, as top-ranked CAPS All-Star TDRH, with a perfect 100.00 player rating, notes. Although an economic downturn may affect its ability to compete, given the higher price points, the company has also been containing its costs.

Global outsourcing, lean manufacturing, total quality management are as much a part of its culture as you would see in an APICS textbook. [They] are constantly squeezing manufacturing costs and push for price increases from their customers/distributors. The quality of their products is not questioned in the market, but their continued price increases open the door for competitors and cause customers to explore other options.

While CAPS player mistrgolf likes Emerson's fundamentals as shown by several metrics, the company's historical achievements are nothing to dismiss lightly, this CAPS investor pointed out last November:

ROE & ROA above industry average. Growth of sales, income and cash flow also above industry average. Turned in another Street beating quarter and raised '08 [guidance]. Has beaten estimates for at least 5 straight quarters.

Just beat it!
Is CAPS correct? These companies may rate higher than GigaMedia, but will they actually top its performance going forward? Head to Motley Fool CAPS and share your opinions on your favorite stock to beat.