5 Stocks Approaching Greatness

Some companies are obviously great investments -- in hindsight. Yet for every stock out there screaming "buy me," others simply give us a nudge and a nod. How can we tell tomorrow's obviously great investments from the thousands of pretenders?

The stars' walk of fame
On Motley Fool CAPS, these opportunities can be found among our four-star stocks. In CAPS' proprietary ratings system, they rank higher than most of the other 5,500 stocks in the CAPS universe, but they're just shy of superstardom. While all the attention might be focused on their five-star peers, we can sift through CAPS to find four-star companies approaching greatness:

  • Arena Pharmaceuticals (Nasdaq: ARNA  )
  • China BAK Battery (Nasdaq: CBAK  )
  • Isis Pharmaceuticals (Nasdaq: ISIS  )
  • Sonus Networks (Nasdaq: SONS  )
  • Synchronoss Technologies (Nasdaq: SNCR  )

Some of these names might surprise you on a list for the almost great? Synchronoss Technologies, for example, has previously partnered with Apple (Nasdaq: AAPL  ) and enjoyed a great run. Even familiar names can offer some of the best opportunities. Perhaps we've just forgotten the potential they still hold. However, the 110,000-member CAPS community of investors chose these companies as less obvious sources for tomorrow's great buys, so let's see why they might merit your attention.

Phat profits
Do investors have the gumption to wait almost a year to see their patience rewarded? They do if they're long-term investors. It might take that long for Arena Pharmaceuticals to see the benefits of its labor with its obesity drug, lorcaserin, which is currently in phase 3 clinical trials. Although some analysts have expressed doubts over the size of the return that Arena will ultimately realize if (or when) the drug is commercialized -- potentially the year after next -- even the doubters seem to think that at current price levels the pharmaceutical is attractive, particularly when you consider the several drugs in its pipeline. Add in deals with big pharmas like Johnson & Johnson (NYSE: JNJ  ) and the overall investment landscape looks promising.

Investors like CAPS member PhillyDan are willing to wait for the large return down the road by getting in cheaply now:

Feeling very confident that Lorcaserin, Arena's anti-obesity drug will receive FDA approval. The Phase III trials have been going well and the independent monitoring of Lorcaserin shows no signs of cardiac heart valve issues. I expect that Arena will have a strategic partner lined up by the end of this year for Lorcaserin. My educated guess is that they are in negotiations with … three or more prospective partners and are looking for the right deal for the partnership. In addition, Arena's pipeline is very compelling.

A smattering of common sense
While "antisense" sounds like something my wife has accused me of having at times, in reality it is a technology for treating diseases. In short, diseases are often associated with the body's overproduction or abnormal production of a protein. Antisense technology interrupts the production of the protein. Isis is concentrating its antisense drug discovery efforts on "molecular disease targets found in the liver, kidney, spleen, lymph nodes, bone marrow, and fat cells," as stated by the company. It has one antisense drug, Vitravene, on the market.

CAPS member spacerumsfield very concisely sets out reasons for finding Isis to be an attractive investment:

-Best "anti-sense" pharmaceutical company in the business, having produced the only FDA-approved antisense drug to date.

-Is currently developing 18 different drugs.

-Next product, which has already successfully gone through preclinical studies, will help treat Diabetes, the most epidemic disease in the world. There is a huge potential for profit here.

A great opportunity for you
You've heard directly from the CAPS community, but do you agree? Are these four-star candidates still investment-grade material? On Motley Fool CAPS, your input can ultimately influence how they're rated. Outperform or underperform, near-term or well in the future, your opinion counts.

Johnson & Johnson is a Motley Fool Income Investor stock pick. Apple is a Stock Advisor recommendation. Try any of our Foolish newsletters today, free for 30 days, and you'll be educated, amused, and enriched by some very sharp investors.

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.

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