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's 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. Let's look at previously rated one- or two-star companies that have recently enjoyed a bump in investor confidence, and see whether the stars are truly aligning in their favor.
|
Company |
CAPS Rating (out of 5 max) |
Recent Price |
Next Year EPS Growth |
|---|---|---|---|
|
Qwest Communications |
*** |
$3.61 |
5% |
|
OpenTV |
**** |
$1.51 |
100% |
|
Nevsun Resources |
*** |
$1.33 |
NA |
|
Affymetrix |
*** |
$7.99 |
1050% |
|
Blue Nile |
*** |
$43.06 |
16% |
Source: Motley Fool CAPS, Yahoo! Finance.
Obviously, this is not a list of stocks to buy -- just a starting point for further research. Yet if some of the best investing minds are taking notice of these stocks, maybe we should, too.
The sun's always shining somewhere
In a bit of backhanded support for Qwest Communications, CAPS member gea1968 would actually prefer putting money into cash than betting that the telecom will outperform the market. However, given Qwest's healthy dividend, taking a chance on the stock might prove rewarding:
Over the next 12 months, I expect the bear market to continue. If I could choose "cash" to outperform, I would do so. In a market like this, a stable utility with a dividend yield over 4% should outperform.
Digital media expert OpenTV has seemingly been giving off faint signals for some time, though it finally turned profitable last December. It faces some stiff competition in its bread-and-butter middleware segment, going up against the likes of News Corp.
The head-to-head battles between biochip makers Affymetrix and Illumina
With all due respect to mckeller7 high throughput sequencing has some way to go and SNPs on chip may not be dead yet. But more importantly is exon chips. If we believe ENCODE, a recent paper in PNAS on drugs influencing alternative transcription (and my personal and humble experience by the way) they have a nice market in front of themselves. Most of their money would come from pharma and perhaps health care as we move toward personalized medicine. Don't write these guys off yet!
Yet Illumina partisan Darkwingsd thinks a buildout of its diagnostic business could be a blockbuster in the making, though it may take a while for the impact to be felt:
They just offered their share of stock and should have capital to develop their molecular diagnostic division. I think that they should hit 100$or split if they release plans for a diagnostic device for DNA markers for health or cancer conditions. BUT>>>> they just started so it might be a while before they have a viable product out. They at least are not short on capital, and have the annual revenues they need to be profitable.
Shine your starlight
Are these stocks cleared for liftoff, or stuck on the launch pad? It pays to start your research on these or any other companies on Motley Fool CAPS. Read 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. Since it's free to sign up and post your thoughts, why not use this opportunity to take your star turn?
