Finding Stocks at a Fever Pitch

The collective power of thousands of investing minds is the driving force behind Motley Fool CAPS, a leading investor-intelligence community. Membership has grown to more than 110,000 investors: professionals, novices, and every level in between.

One of the service's unique features is the ability to not only rate a company on whether you think it will outperform or underperform the market going forward, but to express why you think it will, in as much detail as you want. These analyses, or "pitches," can be as simple as "This stock has a low P/E ratio," or as complicated as a multipage, footnoted thesis. In the context of the overall assessment of the stock, a pitch is another data point to consider.

Throwing strikes
Useful analyses are those that give salient details about a company and its prospects -- on both the bull and bear side -- and the best ones earn recommendations. Not everyone can become famous picking stocks and detailing their reasons, but we call the CAPS investors who merit the most recommendations for their analyses our "pitch-writing superstars." Let's look at these top investors and some of their best recommendations to get a sense of what makes up strong analyses and winning investing.

kristm is not only a top pitcher who's received nearly 500 recommendations, but also a top-rated All-Star with a 99.54 player rating while achieving nearly 65% stock-picking accuracy. Here are a few of kristm's most recent stock picks.

Company

CAPS Rating

Call

CAPS Score

Pitch

Research In Motion (Nasdaq: RIMM  )

**

Underperform

(75.59)

Read It!

Blackstone Group (NYSE: BX  )

**

Underperform

29.67

No Pitch

Hydrogenics (Nasdaq: HYGS  )

**

Underperform

25.52

Read It!

Medis Technologies (Nasdaq: MDTL  )

*

Underperform

(34.94)

Read It!

Abraxas Petroleum (AMEX: ABP  )

*****

Outperform

(0.12)

Read It!

Bob Evans Farms

*

Underperform

11.35

Read It!

A rimshot for rivals
Hedging your bets can sometimes lead to wider losses, as Abraxas Petroleum found out in the first quarter. But investor sentiment has been solidly behind this growing oil and natural gas company. It's set to launch an IPO of its Abraxas Energy division and expects to realize nearly $66 million from the spinoff, which will have some 4.3 million units, more than double what it originally anticipated. Both Abraxas Energy and the parent will trade on the Nasdaq exchange -- as AXLP and AXAS, respectively -- as Abraxas just announced it got approval to move from the American Stock Exchange. Moreover, the stock was added to the Russell 3000 index.

With a range of possibilities open to it, investors like CAPS member gpierson128 find it to be a leaner, smooth-operating company:

Another player in the Gulf Coast region, lots of possibilities in west Texas also, Abraxas is also cleaning up [their] debt nicely,...soon they will be looking a cleaner profits.

Fall like a lead zeppelin
Just as a certain rock band got its name after a critic predicted how its brand of music would be received, investors are thinking that Hydrogenics will have a similar opportunity to show up the critics. As oil continues to hit new records, the potential for hydrogen fuel cells to be the alternative energy source for cars also grows. Investors like thorgibson see the company's opening of filling stations in California as a necessary first step:

A leader in hydrogen fuel cells. Near profitability. Stand alone power systems. They just opened a hydrogen fuel station in California with GM and Shell.

Not all charged up

Investors are more likely to believe that Medis Technologies will burn up, as three-quarters of all CAPS players rating this manufacturer of disposable, portable rechargers expect it to underperform the market. From overly optimistic press releases to share-diluting equity financing, Medis has found itself on the short end of the market's stick: Shares have fallen from a high of $30 a stub in October 2006 to under $4 a share today.

Investors like top-rated CAPS All-Star BADROCKER want to be shown the money:

Money goes into the hole, nuttin comes out. Who or what is eating the money? Equity financing, loans, stock issued, but where is the dividends, or the profit, or something that means something to the investor? Who is eating the money the 'alley gator'? ... I guess we could cut out management bonuses, and halve the management salaries (every quarter until we see daylight).

Inside pitches
Now, just because a top-rated All-Star investor writes a top-recommended pitch for a company is no cause to go out and buy or sell those stocks. You still need to perform your own due diligence. But it's worth considering what they've said as you make your decision.

A Foolish stance
Step up to the batter's box of Motley Fool CAPS and make your opinions known. Since CAPS is a completely free service, throw as many pitches as you like at the stocks of your choice. You'll be helping your fellow investors make better investing decisions.

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's disclosure policy gets a fever when you hold it tight.


Read/Post Comments (1) | Recommend This Article (1)

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.

  • Report this Comment On July 16, 2008, at 9:54 AM, macdtheknife wrote:

    Interesting that The Oil Stock gets an Outperform and the Alt Energy Stock gets panned. The Hygs Comments seem particulary Uninformed. I thought it was typical to do Due Dilligence before passing judgement.

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