Unloved Stocks Ready to Shine

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 based on the opinions and accuracy of 120,000-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 stocks that have recently enjoyed a bump up from their previous ratings of one or two stars and see whether the stars are really aligning in their favor.

Company

CAPS Rating
(5 max)

Recent Price

Next Year EPS Growth Est.

AllianceBernstein Income Fund (NYSE: ACG  )

****

$6.58

NA

Clearwire (Nasdaq: CLWR  )

***

$7.88

23.5%

Cray (Nasdaq: CRAY  )

***

$2.92

10.5%

GT Solar International (Nasdaq: SOLR  )

***

$4.32

NA

XOMA

***

$1.27

28.0%

Source: Motley Fool CAPS, Yahoo! Finance. NA = not applicable.

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 $25,000 to $60,000 a pop, Cray's new HPC, or high-performance computer, might just as well stand for high-priced computer. In fact, that is one of its cheapest computers ever. Cray, which is pretty much synonymous with supercomputers, typically charges millions of dollars for its machines. The newest iteration will be using Microsoft (Nasdaq: MSFT  ) Windows software, which has caused some reviewers to be critical, although market researchers point to the HPC as one of the largest growing segments in the IT market. With the new pricing under $100,000 per computer, the HPC market should continue to grow.

Back in August, CAPS member Innisfael saw IBM (NYSE: IBM  ) as being Cray's only main rival in the supercomputing market, and said it's an afterthought for IBM at that:

Cray is a singular enterprise with a specialized product that has worldwide acceptance and buyers. Its sole competitor is IBM which has a broad menu of products, bundled supercomputers being a relatively small fish for them. Once a darling of the high tech community, its fall has been a chastening. I see a group of qualified people who want to prove the validity and future of their enterprise and the superiority of their product. Score one for the little engine that could.

A wide opportunity
With a joint effort between Clearwire and SprintNextel (NYSE: S  ) -- and five other investors, including Intel, Google, and Time Warner Cable -- the new Clearwire that will emerge sometime in the fourth quarter looks like it will have the potential to be a powerhouse providing WiMAX service. CAPS member bfoust28 sees the future of smartphones and microcomputing being shaped by WiMAX:

this is a good buy. According to my research the infastructure thats been built and the money spent on development into wimax from asian markets alone show that sucess is at hand. wimax is currently holding over 6million customers overseas and phones and other handheld devices are being used all the time on a mobile high speed data wimax network.... the future of smartphone technology and micro computing will be revolutionized by this....

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. Since it's free to sign up and post your thoughts, why not use this opportunity to take your star turn?

Sprint Nextel, Microsoft, and Intel are Motley Fool Inside Value selections. Google is a Rule Breakers recommendation. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey owns shares of Intel, but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.


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