4-Star Stocks Poised to Pop: Nuance Communications

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Based on the aggregated intelligence of 115,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, speech software provider Nuance Communications (Nasdaq: NUAN) has earned a respected four-star ranking. While five-star stocks have been the best performers, our data has shown that four-star stocks still outshone the market by a significant margin and shouldn't be taken lightly; conversely, low-rated stocks have woefully lagged the market average.

With that in mind, let's take a closer look at Nuance Communications' business, and see what CAPS investors are saying about the stock right now.

Nuance Communications facts 

   

Headquarters (Founded)

Burlington, Massachusetts (1992)

Market Cap

$3.68 billion

Industry

Application Software

TTM Revenue

$734.84 million

Management

CEO Paul Ricci

CFO Tom Beaudoin

CAPS members bullish on NUAN also bullish on

Ctrip.com (Nasdaq: CTRP)

Buffalo Wild Wings (Nasdaq: BWLD)

Portfolio Recovery Associates (Nasdaq: PRAA)

CAPS members bearish on NUAN also bearish on

Netflix (Nasdaq: NFLX)

Google (Nasdaq: GOOG)

First Solar (Nasdaq: FSLR)

Sources: Capital IQ, a division of Standard & Poor's, and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, fully 1,432 of the 1,483 All-Star members who have rated Nuance Communications -- some 97% -- believe the stock will outperform the S&P 500 going forward. These All-Star bulls include fredericch and EMG114, both of whom are ranked in the top 15% of our community.

In mid-2006, fredericch reminded our CAPS community that Nuance "dominates the IVR market in the U.S. and abroad. They have the bulk of the market in dictation and voice recognition transcription, thanks to a number of strategic and daring acquisitions."

A more recent pitch from EMG114 in April of this year followed that bullish line of thinking, elaborating the company's acquisition-enhanced competitive edge:

It's expanding and growing fast and buyouts have helped this company. First of all, the technology that it offers is being used for tech assistance, flight status and many more tech related in today's modern world since it has thousands of customers for its products. It has grown mainly through buyouts since it has acquired 18 purchases in the past 8 years and recently, it acquired eScription, a speech software used in medical transcription.

What do you think about Nuance Communications -- or any other stock, for that matter? Make your voice heard on Motley Fool CAPS today. More than 115,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

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Nuance, Ctrip.com, Portfolio Recovery, and Buffalo Wild Wings are all Motley Fool Hidden Gems recommendations. Netflix is a Stock Advisor selection. Google is a Rule Breakers pick. The Fool owns shares of Buffalo Wild Wings. Try any of our Foolish newsletters today, free for 30 days.

Foolish contributor Brian Pacampara owns no position in any of the companies mentioned. The Fool's disclosure policy always gets a perfect score.

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 August 13, 2008, at 3:33 PM, rtho wrote:

    The only thing that is going to pop is the bubble keeping NUAN at an inflated value. The company does not generate any GAAP profits. It shows proforma profits by excluding a huge amount of stock compensation. Naive investors buy the stock, but astute management keeps selling. The growth rate is inflated through acquisitions. The stock is worth $10 at best in my opinion.

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