Unloved Stocks Ready to Shine

Think of investor sentiment as a pendulum that swings in tandem with a company's share price. When investors begin to think highly of your company, its stock might also start heading in the right direction. Alas, you can rarely tell when investors are warming to a stock until after it has made that upward swing.

An astrolabe for investors
But Motley Fool CAPS' ratings, aggregated from the opinions and accuracy of 105,000-plus investors, offer a great way to monitor investor sentiment. Like astronomers scanning the skies, investors can follow a stock's stars through its CAPS rating trend, tracking investor sentiment to help determine the best time to invest. Let's look at companies that used to be rated one or two stars but have recently enjoyed a bump in investor confidence and see whether the stars are really aligning in their favor.

Company

CAPS Rating (out of 5 max)

Recent Price

Est. FY08 EPS Growth

Depomed (Nasdaq: DEPO  )

***

$3.56

NA

EnerNOC (Nasdaq: ENOC  )

***

$16.10

(7%)

Gasco Energy (AMEX: GSX  )

***

$3.70

213%

Ivanhoe Energy (Nasdaq: IVAN  )

***

$2.36

56%

TeleCommunication Systems (Nasdaq: TSYS  )

***

$4.99

21%

Source: Motley Fool CAPS, Yahoo! Finance.

Obviously, this is not a list of stocks to buy -- just a starting point for further research. Yet if some of the best investing minds are taking notice of these stocks, maybe we should, too. 

Still rolling on
Investors are perennially hoping the time to exploit the oil sands of Canada has arrived. Bituminous sand has trapped extra-heavy oil inside, and its extreme viscosity makes it an expensive form of oil to extract and use. At lower price levels, it's not advantageous to try, but at above $100 a barrel, oil sands start making more economic sense. Canada has the world's largest deposits of oil sands, along with Venezuela. With much of the "cheap oil" already tapped, more expensive forms like the oil-sands variety are becoming attractive.

Oil exploration companies like Ivanhoe Energy and Oilsands Quest (AMEX: BQI  ) look to capitalize on that, only their promise has seemingly been just as ephemeral as the prospects for actually producing anything of value from their efforts.

Moreover, any discussion of Ivanhoe must also include a reference about its chairman, Robert Friedland, a one-time stock promoter who also happened to have been at the head of a company involved in a large cyanide spill that environmentalists call the "Exxon Valdez of mining." For many, it's hard to separate Friedland's unsavory past with the prospect that Ivanhoe is little more than his latest venture.

For those who can look past the company's masthead, Ivanhoe's technology may be what the industry needs, according to CAPS All-Star investor unvrsldeflation.

This company is a major player in heavy oil upgrading that is restructuring itself to take advantage of its expertise. They will be big in Canadian oil sands as well as conventional heavy oil, what the world mostly has left, in various places around the world.

Still, it can't be denied that Ivanhoe Energy remains one very speculative stock, as it has been for many years. Investors looking to reap any windfall from soaring oil prices should tread warily.

Shine your starlight
So is Ivanhoe on a crusade, or will it be disinherited, like its literary namesake? Well, at Motley Fool CAPS, every investor's opinion counts. Your voice could determine whether these stocks become shooting stars or supernovas. Because it's free to sign up and post your thoughts, why not use this opportunity to take your star turn?

Shine a light on 30 days of free stock picks with any Fool investment service.

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


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