5 All-Star Stocks

Win or lose, we all have 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 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 All-Star backing:

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.

Building communities
When the Canadian government decided to change the tax treatment of income trusts in 2006, some segments of the stock market were cut off at the knees as investors fled such stocks because of the higher taxes. While the immediate impact was to halt the conversion to trusts of some companies that were considering the move -- such investments essentially pay no taxes, so it was obviously advantageous to convert -- for those that were already designated as trusts, the rules would not go into effect until 2011.

That didn't matter for a lot of them. Stocks like Advantage Energy Income Fund, which through its subsidiary, Advantage Oil & Gas, explores for and develops oil and natural gas in Canada, were pummeled. Only in recent months, with the price of natural gas continuing to climb and reserves of it in both Canada and the U.S. falling, have the stock prices of Advantage Energy, Precision Drilling (NYSE:PDS), and even Penn West Energy Trust (NYSE:PWE) begun to march up again.

It doesn't hurt that these trusts still pay out prodigious dividends: Advantage yields 11%; Precision Drilling, 6%; and Penn West 13% annually.

The misunderstanding about what the taxes represent has contributed to their low prices, though that might be changing. As CAPS investor caterpillar10 points out, U.S. investors have always been subject to the taxes anyway, so the change in their Canadian status didn't affect them.

Canadian oil / gas royalty trusts have been oversold due to new regs. re: witholding taxes, so the prices are low giving investors good prospects for appreciation and annual yields around 12% IN CANADIAN $$ which have grown about 46% vs US $$ since 2001 - the best of 3 worlds. Those taxes don't kick in til 2011 and Americans have been subject to them all along anyhow. This trust in particular is more weighted toward [natural] gas which is cheap [relative] to oil so has more immediate upside.

Another CAPS investor, jgseattle, also points out that with the weak dollar going up against the strong loonie, the dividend is boosted.

Canadian trust yields about 14%. This is a good company with great assets. The Canadian dollar has gone up helping the dividend in USD terms. Even with this advantage the stock has gone down. I think it is time to buy some for the yield and hold for the long term.

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 to let us know what you think about these and your other favorite investments? It's completely free, and along with the other 105,000 investors there, you may help uncover the next All-Star stock.