A 1-in-100 Investor

Presidents are often measured by what they achieve during their first 100 days in office. Schools have parties for students on the 100th day of the school year. When Jerry Yang returned to Yahoo! last summer, he gave himself 100 days to effect change at the online portal.

Around here at Motley Fool CAPS, we keep an eye on the 100-day mark, too. Some of our best investors -- we call them All-Stars -- have achieved top player ratings after garnering a score of 100 in their first 100 days on CAPS. Analysis has shown that the top-rated stocks have had the best performance over the first year we've tracked them, so might we assume that when the best CAPS players rate the best stocks, there is a correlation as well?

One of our highest rated CAPS investors is DemonDoug, who sports a near-perfect 99.97 player rating. A player since January 2007, DemonDoug has 110 active picks on CAPS out of almost 200 stock picks made. Achieving better than 75% accuracy, DemonDoug has also attracted 723 "groupies," CAPS players who've listed this leading investor as one of their favorites.

Here are a few of the most recent stock selections and how they were rated.

Stock

CAPS Rating

Call

Price^

Current Score

American Superconductor (Nasdaq: AMSC  )

**

Underperform

$27.68

(9.40)

Carolina Group

***

Outperform

$69.06

(3.45)

Citrix Systems

****

Outperform

$30.16

14.29

Flotek Industries (NYSE: FTK  )

*****

Outperform

$17.57

11.30

Hansen Natural (Nasdaq: HANS  )

****

Outperform

$29.90

(5.92)

Kimberly-Clark (NYSE: KMB  )

****

Outperform

$63.96

(3.14)

Kinetic Concepts

*****

Outperform

$39.62

1.88

Phillip Morris

*****

Outperform

$50.51

1.09

Ryland (NYSE: RYL  )

*

Underperform

$33.01

5.81

Targa Resources Partners

*****

Outperform

$24.23

7.01

Source: Motley Fool CAPS. Current score is how many percentage points a player is beating (lagging) the S&P500 index from the time of the call.
^Price when call was made.

Note that just because one of our CAPS leaders has chosen these doesn't mean you should go right out and buy (or short) them. These are just presented as a list of ideas for further Foolish due diligence. Along those lines, let's take a closer look at one of them.

Drink up
It's not every day that you can post so-so earnings results -- so-so in terms of analyst expectations, anyway -- and still come out looking energized. While Hansen Natural might have seen its shares tumble as a consequence of its results, its main beverage, Monster Energy, gained market share over its rivals and the company posted profits that were 42% higher than last year. (Hansen's shares are now at less than half of where they were trading last fall.)

That's part of the risk of investing in companies that sport lofty valuations like Hansen once had. Even good results are seen in a negative light when they fail to live up to the ever-higher expectations the market has built into them.

When DemonDoug recommended Hansen Natural as an outperform, he compared the new valuation to Pepsi (NYSE: PEP  ) and Coca-Cola (NYSE: KO  ) , and saw the recent growth rate as a tempting opportunity to get back in. Where it was trading at 60 times earnings only six months ago, at a current P/E of around 18, it trails the market as a whole:

Trailing P/E is now significantly less than KO or PEP, and is growing both top and bottom lines at twice their rate. Is the current quarter just a hiccup or a harbinger of a longer-term trend? My guess is that since [CAPS player] floridabuilder will be making tons of dough doing bank repo land deals, he's going to personally be propping up this stock by himself by buying hundreds of cases over the next 5 years. That's my outperform thesis and I'm sticking to it. :)

Another top CAPS investor, lepant, finds opportunity in Hansen's new coffee drinks, which, although they helped lead to margin compression this quarter, represent a growth driver for the future:

The fact that in the most recent quarter HANS sold more of its coffee drinks than their standard energy drinks [led] them to have lower margins. The fear on the street is that margins are going to continue to shrink. The way I see it is that the Java Monster line is a relatively new addition to their line-up whose success was greater [than] the company had envisioned, thus they ended up paying higher prices for the raw ingredients thus causing margin compression. I foresee them in the future being up to cut costs and ultimately return margins to roughly [their] previous levels.

A 1-in-100 opportunity
Some of the best and smartest players in the CAPS investor-intelligence community have amped up their endorsements of Hansen Natural, but we haven't heard from you. As hockey great Wayne Gretzky once noted, "You miss 100% of the shots you never take." At Motley Fool CAPS, every investor's opinion counts. Since it's free to sign up, why not use this opportunity to take your best shot?

Kimberly-Clark is a Motley Fool Income Investor pick. Coca-Cola is an Inside Value recommendation. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey owns shares of Intel, but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.


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