5 All-Star Stocks

Win or lose, we've all got opinions about which stocks are rockets and which are dogs. If we could invest like Peter Lynch or Mohnish Pabrai, we'd probably have a lot more companies in our win column than in the loss one. Warren Buffett began buying railroads last year, and just about any company that ran on tracks came into play.

So when top-notch investors back a stock, you might want to give it more consideration. Over on the investor collaboration site Motley Fool CAPS, we can do just that. On CAPS, players who've earned a rating of 80 or better by consistently outperforming their peers are dubbed All-Stars. Sometimes, these ace investors will back a stock that others think is a dog. Considering the All-Stars' track records, we might want to look a little more closely at their selections.

Here are five companies that have been marked down by some investors, but enjoy unanimous backing by the All-Stars who rate them:

Company

Total Ratings

% Bulls

All-Star Ratings

Double-Take Software (Nasdaq: DBTK  )

748

99%

172

Pride International (NYSE: PDE  )

370

99%

152

Golar LNG (Nasdaq: GLNG  )

298

99%

91

Atlas Energy Resources (NYSE: ATN  )

222

99%

85

Sutor Technology (Nasdaq: SUTR  )

47

98%

8

Of course, this isn't a list of stocks to buy and sell; instead, it should serve as a starting point for your own research and analysis.

Doing a double take
Despite the haircut that data-recovery and -protection software maker Double-Take has taken since the end of last year -- its share price has been halved since December -- investors on CAPS are still extremely bullish on the Motley Fool Stock Advisor recommendation. Undoubtedly, that's partly because of the market opportunity presenting itself.

According to the market researchers at IDC, the worldwide storage replication software market is expected to grow from $2.1 billion in sales in 2005 to $4.2 billion in 2010, while the specific Windows server subsegment served by Double-Take is expected to grow by a compounded rate of 25% annually.

The industry leaders here are EMC (NYSE: EMC  ) , with a 26% market share, followed by Symantec (Nasdaq: SYMC  ) with an 18% share. Yet these are array-based replication systems, which account for 84% of worldwide market revenues. What Double-Take offers is "host-based" software, and at better than 25% annual growth last year, that segment is achieving the highest annual growth of any of the segments.

Even with this good news, though, the market was caught off guard by the company's lowered forecast for 2008. Oh, revenues and earnings are expected to grow by 25% this year -- an excellent year for any other company, particularly in this market. But it was less than what was anticipated.

CAPS investors like josephhofmann look at the market's reaction to Double-Take and see opportunity, as noted in February:

The company is making money just not as much as expected, which happens all the time, yet the stock loses over half [its] value because as soon as it fell a few points people panicked and starting selling. Now the panic is over, the price has [stabilized] and it's only a matter of time before common sense takes over, people look at the facts and see this solid company may not be worth the $24 it was selling at, but definitely more than the $11 it's currently at.

Other CAPS investors, like top-rated All-Star TMFBreakerJava, see Double-Take outperforming for many years, because it's "the solution of choice for cost conscious small and medium sized enterprises" that need to safeguard their computer data. TMFBreakerJava explained the position in November:

It's a complicated IT company, but basically they have a unique and diverse niche approach to helping businesses and governments save money and improve efficiency. That's always an easy sale.

An all-star act
Although a few CAPS investors have bet against the house here, we haven't yet heard from you. Why not head over to Motley Fool CAPS now, and let us know what you think about these and your other favorite investments? It's completely free, and along with the other 93,000 investors there, you may help uncover the next All-Star stock.


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