5 Stocks You're Gonna Want to Own

Considering the declining state of print media today, it wouldn't be surprising to learn that online venues have profited from advertisers looking to reach a wider readership. Last fall, market researchers were forecasting a 30% increase in online advertising with a near-29% decline in offline ad spending.

One of the big beneficiaries of that swing to the online medium has been the financial news hub TheStreet.com (Nasdaq: TSCM  ) , which, back in February, recorded a 125% increase in non-financial advertising, which comprised more than half of its total revenue. Total advertising sales posted a 43% increase from the fourth quarter in 2006.

However, that might be changing now; we may be seeing the first cracks appearing in the online-advertising dam. With the economy withering and businesses feeling the pinch from reduced customer spending, their own spending may be crimped as well. TheStreet.com has felt it as first-quarter ad revenue came in below expectations, but that could be just a momentary blip. Both Yahoo! (Nasdaq: YHOO  ) and Google (Nasdaq: GOOG  ) have confounded those who predicted their own earnings reports would show dismal ad spending. TheStreet.com is still generating decent cash flows, which the market has overlooked by driving shares down.

Screening for likability
TheStreet.com showed up on a screen of companies that have enjoyed growing investor support these days after starting off the year on the outs. TheStreet.com jumped from a two-star Motley Fool CAPS rating (out of five) in January to four stars today, while also enjoying a valuation below that of the market.

CAPS is a 105,000-member investor community that rates thousands of stocks on whether they will outperform or underperform the market. While it’s not a predictive service, in its first year of operation, the trailing returns of the stocks in the CAPS universe correlated precisely with their relative CAPS ranking. Top-rated four- and five-star stocks outperformed low-rated one- and two-star stocks.

Here are a few of the other companies the CAPS screener found that are currently enjoying significant investor support:

Company

CAPS Rating, January

CAPS Rating, Today

Trailing P/E

PEG

PepsiAmericas (NYSE: PAS  )

**

*****

14.8

1.2

TheStreet.com

**

****

8.1

0.9

Stone Energy (NYSE: SGY  )

**

****

8.1

0.9

Learning Tree (Nasdaq: LTRE  )

**

****

14.8

NA

Descartes Systems (Nasdaq: DSGX  )

*

*****

8.2

1.0

Sources: Motley Fool CAPS; Yahoo! Finance.

Naturally, this is not a list of stocks to buy and sell, but rather a starting point for further analysis. Investors have raised their outlook significantly on these companies, and that may mean there is still room to move.

A fine mesh filter
It's true that the softening economy is going to play havoc with some of these companies. If businesses continue to cut back in the face of worsening consumer-spending trends, then those who rely upon the kindness of strangers to generate a large part of their revenue will also feel the impact. Professional analysts have certainly been trimming back their predictions of what TheStreet.com can or will do, but some investors, like CAPS player fredmahnke, are more bullish:

Great Entry point. Stock has been beaten down based on poor earning report but is poised to make a long-term run. Strong cash flow, investing in the future as Cramer takes his show to colleges to bond with the next generation of investors.

Take a CAPS bow
There are many ways to screen for stocks to beat the market. You can use the new CAPS screener to find your own winning investments. And if you want to see what other stocks CAPS investors have slated to outperform the market, head over to Motley Fool CAPS now – it’s completely free to join.

You can screen, sort, slice, and dice all the picks from any of the Fool's investment services free for 30 days.

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


Read/Post Comments (0) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 652722, ~/Articles/ArticleHandler.aspx, 8/29/2014 6:14:16 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement