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 actually grown to more than one hundred thousand 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, 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 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 the bear sides -- and the best ones earn recommendations. Not everyone can become famous picking stocks and detailing their reasons, but we call the investors who merit the most recommendations for their analyses our "pitch-writing superstars." Let's look at some of these investors and some of their best recommendations and get a sense of what makes up strong analyses and winning investing.

Hondo928 is not only a top pitcher who has received 455 recommendations so far for his pitches, but also an All-Star with a 99.85 player rating, achieving nearly 67% accuracy on his picks. Here are a few of his most recent stock picks.

Source: Motley Fool CAPS; maximum rating is five stars. Score is by how many points a call is beating (lagging) the S&P 500 from the time of the call.

The Bank of Bernanke
It finally took the Fed chairman and the Treasury secretary opening the taxpayers' bank vault to forestall the collapse of the mortgage lender, but Freddie Mac did manage to survive a week that started off with it looking like it would become the next Bear Stearns. That doesn't mean shareholders are safe yet, because the huge crisis of confidence in the system has regulators and politicians holding their breath, hoping it can squeak by. Didn't we just go through this back in March when the vault was opened for Lehman Brothers (NYSE:LEH)?

The theory goes that if Freddie Mac had been allowed to go under, the giant sucking sound you'd hear would be the entire economy being pulled into the black hole it created. Because of sentiment that "it's too big to fail," investors like CAPS member epetroel feel that the worst is behind it.

I wouldn't say [Freddie Mac] is a great stock by any means, and I've made plenty of points shorting this over the past few months, but the recent sell-off was runaway fear - rumors and speculation at their worst. The government simply can't let this outfit fail, and the recent moves by the feds have indicated that they aren't about to take it over and leave the shareholders high and dry either. [Freddie Mac] was over $20 less than a month ago, and now it's down to $6. I see this as an easy 100 points over the next few weeks here as sanity returns.

Munch a bunch
With volume growth apparently slowing, soft drink giant PepsiCo says it's going to raise prices to protect its margins. Rising commodity prices have been eating away at the company. Higher costs for corn, wheat, cooking oil, and even oats -- Pepsi owns Quaker Oats -- are hurting its profits, though analysts anticipate the Frito Lay snack division and international business will help stabilize results.

Despite the pressure, investors still find PepsiCo irresistible, with CAPS member stockhaven pointing to its well-known brands and international growth as reasons it will outperform the market.

Solid company. Great management. Owns several popular brands like Tropicana, Gatorade, Frito Lays etc. Global presence makes it a good bet even if the dollar goes down. Good dividend.

Inside pitches
Just because a top-rated All-Star investor writes a recommended pitch for a company is no reason to go out and buy and 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. Because 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 decisions.