Should You Buy These Stocks Now?

Some stocks simply have such great potential that "everyone" knows they're a good buy today. Yeah, right.

If we knew in advance that Apple would return more than 2,500% over the past decade, we'd have mortgaged our house on it -- and yours, too! It's easy to see which companies have been winning investments after the fact. We need to know beforehand which stocks will grow hundreds or thousands of percent in value over the years. That's where Motley Fool CAPS comes in.

The more than 105,000 professional and novice investors in CAPS rarely agree on a stock's prospects. Motley Fool Hidden Gems recommendation FormFactor (NASDAQ:FORM) is a well-respected, top-rated stock, but 15 of the nearly 1,000 CAPS players to rate it still believe it will underperform the market. So when you come across a stock that everyone on CAPS thinks will outperform, you've got something special. Here are a handful of those "obvious" investments.

Sources: Motley Fool CAPS and Capital IQ, a division of Standard & Poor's. TTM = trailing 12 months.
*NA = not available. ZEP had 7% ROC for the most recent quarter.

As always, none of the companies on this list should be considered formal recommendations -- just starting points for further research. We've simply used CAPS to narrow down your workload.

Let's go to the videotape!
I mostly remember TDK as a manufacturer of cassette tapes -- at one time my Engelbert Humperdinck collection was pretty extensive. Yet, like the 8-tracks before them, cassettes pretty much became history with the advent of the CD and DVD. TDK, seeing the writing on the wall, moved heavily into that arena. It was even more visionary than that, as it was one of the founding members of the Blu-ray Disc Association, having been involved in the development of blue laser technology as far back as 1998.

Although more than 9 million Blu-ray movies have been sold so far by studios, according to the company, they've been slow in supplanting traditional DVDs, undoubtedly due to the battle with HD-DVD. With that now past and with more Blu-ray movies coming on the market, it is a matter of time before the technology becomes the undisputed leader. Tellingly, it is here in the U.S. that Blu-ray disks have caught on, more so than in the rest of the world.

While that presents opportunity, TDK derives only about 12% of its revenue from the U.S., with nearly half coming from its home domestic market of Japan. Yet the Japanese economy seems to be experiencing every bit as much of a downturn as we are here. Business profits there fell 17.5% in the latest quarter as higher material costs and inflation weighed on the markets.

Within that environment, though, investors are expecting TDK to thrive because of the inexorable ascension of Blu-ray media. Top-rated CAPS All-Star cjlee001 feels it's only a matter of time before the company is able to harvest the prize:

During the war between HD-DVD (Toshiba) and BluRay (Sony), TDK decided to support BluRay and invested heavily in BluRay technology, i.e. coating, etc. Now that BluRay has become the standard, TDK will reap the rewards.

Others, like CAPS player duckclan in early April, see the company's financial situation as strong and well positioned for further growth:

this stock has a 2% dividend. The company has tons of cash ... generates positive cash flow yearly, is in a growing business ... and practically zero debt. i think this company transitioned well from tapes (media) to specialty magnets/capacitors well. ... 

Let's hear from you
How about your take on these or other "obvious" winning investments? Is this a chance to dig deep with your portfolio to expand to the next "buy now" stock? If you want to add your two cents, sign up to join the Motley Fool CAPS community, free.