5 All-Star Stocks

Win or lose, we've all got an opinion 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 on the loss side of the ledger. 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 All-Star backing:

Company

Total Ratings

% Bulls

All-Star Ratings

Tele Norte Leste Participacoes (NYSE: TNE  )

569

99%

192

Layne Christensen (Nasdaq: LAYN  )

248

99%

89

Wonder Auto Technology (Nasdaq: WATG  )

302

98%

50

Claymore S&P/TSX CDN Preferred ETF (AMEX: CPD  )

106

98%

25

AgFeed Industries (Nasdaq: FEED  )

174

98%

23

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.

Going whole hog
Chicken is often thought of in this country as the primary source of protein for humans, so it may surprise some people to find out that 44% of the world's population derives the bulk of its protein from pork. And China accounts for about half of the world's pork supply and consumption. It accounts for 70% of the protein consumption amongst Chinese.

Pork prices have been climbing steadily over the past year as large swaths of the Chinese porcine population became infected with a disease known as "blue ear," which has pig farmers moving to enlarge their holdings to offset the effects. One that has been doing that particularly well, and which has managed to capture aspects critical to the industry, is AgFeed Industries. Both a pig-farming business and a fodder feed company, it recently purchased five additional hog farms and plans to make more acquisitions. It's finding the higher prices and widening margins too good to pass up.

The other side of its business is to make feed for all stages of a pig's life. Pig farmers have also felt the impact of the world's search for alternative fuels, as corn prices have surged in China as well. Because they are controlled by the Chinese government, Chinese corn prices are not 100% correlated with the global market price for corn, but they still tend to move in the same direction. However, a bid by the Chinese authorities to contain prices caused provincial corn seed authorities to separate from their existing sales affiliates. They ended up liquidating their inventories and depressing prices when they dumped them on the market.

With a unique position in a market with little competition, CAPS player StwPer argued in December that AgFeed was ready to move:

AgFeed enjoys a unique position in China. Pork and chicken are the prefered meats in China and AgFeed, using centuries of American know-how, is fattening up the hog population without hormones, antibiotics or anything synthetic and at a reasonable price. Apparently this isn't going unnoticed by Chinese hog raisers since AgFeed recently opened it's fourth plant in China. It certainly seems like a trend to me, especially considering there's no competition yet.

Other CAPS investors, like fusanmao, find that AgFeed's decision to focus on the lucrative Chinese market means that economic and demographic trends favor its future:

China Pork market is total diferent from North American Pork market: China-high demand with limited supply, NA low demand with high hog raising cost...Strong management team with strong commitment to deliver the projected financial results...Right segment, right timing, and right hog raising knowledge with high entry barrier for big international competitors. Feed will eventually be the market leader for China pork consuming market - 1.3 billion people consume pork everyday.

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 94,000 investors there, you may help uncover the next All-Star Stock.


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