Think of investor sentiment as a pendulum that swings in tandem with a company's share price. When investors begin to think highly of your company, its stock might also start heading in the right direction. Alas, you can rarely tell when investors are warming to a stock until after it has made that upward swing.
An astrolabe for investors
But Motley Fool CAPS' proprietary ratings, aggregated from the opinions and accuracy of 115,000-plus members, offer a great way to monitor investor sentiment. Like astronomers scanning the skies, investors can follow a stock's stars through its CAPS rating trend, tracking investor sentiment to help determine the best time to invest. Data suggests that CAPS' highest-rated stocks performed best, while the lowest-rated did worst, so let's look at companies that used to be rated one or two stars and have recently enjoyed a bump in investor confidence to see whether the stars are really aligning in their favor.
|
Company
|
CAPS Rating
(out of 5 max)
|
Recent Price
|
Next Year Estimated EPS Growth
|
|
BB&T (NYSE: BBT)
|
***
|
$29.22
|
7%
|
|
iStar Financial (NYSE: SFI)
|
***
|
$5.75
|
194%
|
|
SunPower (Nasdaq: SPWR)
|
***
|
$96.96
|
57%
|
|
Unum (NYSE: UNM)
|
***
|
$25.33
|
10%
|
|
Winn-Dixie Stores (Nasdaq: WINN)
|
***
|
$13.79
|
4,800% *
|
Source: Motley Fool CAPS, Yahoo! Finance. * $0.49 estimated EPS for fiscal 2010 versus $0.01 estimated EPS for fiscal 2009.
Obviously, this is not a list of stocks to buy -- just a starting point for further research. Yet if some of the best investing minds are taking notice of these stocks, maybe we should, too.
The sun's always shining somewhere
At least one analyst speculates that BB&T might be considering a merger. The new CEO is viewed as being more open to a merger -- FifthThird Bancorp (Nasdaq: FITB) was one name discussed.
Other Foolish analysts think the time may be right to start buying bank stocks. CAPS member bluejonnyd believes that while the knife may fall a little further still, considering the dividend BB&T pays, it's worth betting on a bounce back up.
BB&T, while caught inevitably in the current disastrous credit situation, shows signs of being able to survive it and thrive afterwards. For one, the bank has been around in some form or another since Reconstruction, and the institution appears financially sound. Though growth has mostly been stymied, earnings and assets have not taken a particularly hard hit - most certainly not a hit hard enough to warrant the 42% price decrease in the past year. That dramatic run down is the reason that the [P/E], at an attractive 7.56, is at a five-year low, and is in fact lower than the dividend, a well-plumped 7.95%.
The knife on this stock may still be falling, at least until the loan markets unscramble themselves, but when they do it's my bet that BB&T will still be around, paying a good dividend, and being a big part of the correction back upwards.
With demand for alternative energy rising regardless of the price of oil, top-rated CAPS All-Star outinthesnow thinks SunPower is in position to capture the lion's share of business. It is casting about for some new rain to fall outside Spain's plain, much as SunTech Power (NYSE: STP) awaits the fallout as well.
finally some good news helping to separate alternative energy from oil.... Oil is old news, there is not enough to meet demand over and done. More sources for energy have to be developed no matter how much a barrel costs. I honestly think in the next few years the two sectors will unlink completely and solar will be tradeable with out [worrying] about hurricanes and political fighting.
While analysts are coming around to the notion that iStar Financial may not be in as bad a shape as originally thought, CAPS member pjani06 pointed that out more than a month ago, when he noted that the former Income Investor recommendation had a solid financial base.
A financial that has a solid capital base (not falling apart like other financials), has plenty of inside owners (that are not dumping the stock), are expected to have profits this year, next year, and all quarters in between...AND...have an insanely high dividend rate which can be taken advantage of NOW.
A dividend dreamer.
Shine your starlight
So are these stocks driving ahead or ready to crash? It pays to start your research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. Then weigh in with your own thoughts on which stocks you think are shooting stars or supernovas. Because it's free to sign up and post your thoughts, why not use this opportunity to take your star turn?
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