Should You Buy These Stocks Now?

Some stocks simply have such potential that "everyone" knows they're a good buy today. Yeah, right.

If we knew in advance that LabCorp would return 1,350% over the past decade, we'd have mortgaged our house on it -- and yours, too! It's easy to see which companies have been winning investments after the fact. We need to know beforehand which stocks will grow tens of thousands of percent in value over the years. That's where Motley Fool CAPS comes in.

The more than 83,000 professional and novice investors in CAPS rarely agree on a stock's prospects. Motley Fool Stock Advisor recommendation Activision (Nasdaq: ATVI  ) is a well-respected, top-rated stock, but 1,457 of the 1,504 CAPS players to rate it believe it will outperform the market. So when you come across a stock that everyone on CAPS thinks will outperform, you've got something special. Here are a handful of those "obvious" investments.



All-Star Bulls


Layne Christensen (NASDAQ:LAYN)




Alexco Resource (AMEX:AXU)








Nicholas-Applegate Convertible & Income Fund  (NYSE:NCV)




Excel Technology (NASDAQ:XLTC)




Source: Motley Fool CAPS.

As always, none of the companies on this list should be considered formal recommendations -- just starting points for further research. We've used CAPS simply to narrow your workload.

Constructing a profitable investment
With the economy wobbling from a looming recession, it's not surprising to find the stocks of businesses in the construction and infrastructure industry looking like they've been hit by a wrecking ball. The heavy construction industry is one of the worst-performing sectors over the last three months. Like many of its competitors, Layne Christensen's stock has also been demolished by expectations that the worst is yet to come.

Part of that diminished hope stems from Layne itself. It reported strong third-quarter revenue and earnings growth that beat analyst forecasts, but suggested that the fourth quarter looked more uncertain. Management noted that Mother Nature will play a big role in Layne's immediate future and said the fourth quarter will be its toughest year-over-year comparison ever. That assessment helped send Layne's stock down 37% since.

Although the outlook seems dour, the recent strong earnings report by construction-industry stalwart Caterpillar (NYSE: CAT  ) may offer more hope. Certainly the diversity of Layne's businesses had CAPS investors, like top-rated All-Star reddingrunner, thinking the low valuation last fall presented an opportunity:

Oil and water and mines, oh my!

All my favorite industries in one cheaply priced stock. PEG is less than one, even with the conservative growth estimates.

Oh my!

At current prices, Layne Christensen still seems discounted to its growth prospects for 2008. But if growth slows next year and over the longer term, it might be more fairly valued.

CAPS investor marinepride agreed that the various lines of business provide not only opportunity but protection as well. If one segment falters, the others could remain intact:

Supply and Demand and all under one roof - Oil, Minerals, Water. Automatic money making businesses in the past and even more so in the future. Oil prices are high but how much do you pay for a gallon gas vs a gallon of water??? Even if one portion of business falls off, the other businesses keep it going - thirsty yet?!?

Of course, in a recession, all segments might have difficulty achieving performance numbers.

Let's hear from you
How about your take on these or other "obvious" winning investments? Is this a chance to dig deep with your portfolio to mine the next "buy now" stock?  If you want to add your 2 cents, sign up to join the Motley Fool CAPS community, which is 100% free.

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Rich Duprey

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time.

Having made the streets safe for Truth, Justice and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. So follow me on Facebook and Twitter for the most important industry news in retail and consumer products and other great stories.


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Related Tickers

5/24/2016 4:00 PM
LAYN $8.88 Up +0.27 +3.14%
Layne Christensen… CAPS Rating: **
CAT $71.09 Up +0.69 +0.98%
Caterpillar, Inc. CAPS Rating: ***
NCV $5.89 Up +0.05 +0.86%
Nicholas-Applegate… CAPS Rating: ****
XLTC $31.94 Down +0.00 +0.00%
Excel Technology,… CAPS Rating: No stars