Some companies are obviously great investments -- in hindsight. Yet for every stock out there screaming "buy me," others simply give us a nudge and a nod. How can we tell tomorrow's obviously great investments from the thousands of pretenders?
The stars' walk of fame
The data show that stocks achieving five-star ratings on Motley Fool CAPS have outperformed the market by 12 percentage points, and newly minted five-star stocks represent your best opportunity to capture those returns. So let's sift through the proprietary ratings system and find those stocks heading toward superstardom. Here are a handful of four-star firms approaching greatness.
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Elan
(NYSE:ELN) -
Geron
(NASDAQ:GERN) -
Harvest Natural Resources
(NYSE:HNR) -
Monsanto
(NYSE:MON) -
TD Ameritrade
(NASDAQ:AMTD)
Some of these names might surprise you. While TD Ameritrade's commercials are more serious than -- and not nearly as enjoyable to watch as -- the E*Trade
In the sight of greatness
Removing the ban on stem-cell research, as President-elect Obama has indicated he favors doing, is expected to open the doors for more federal funding. That much is a given, but there's also the great possibility that it might also unleash a torrent of private investment, including money from foundations and research institutions that were reticent about making such investments with the ban in place.
Even Pfizer
This compsny owns key patents in the areas of oncology and spinal cord , hear failure and diabetes treatments that coupled with major tie ups with several major pharmaceutical companies should make it a key health industry player . Two oncology (cancer) are currently in FDA sanctioned clinical trials and a spinal cord injury clinical trial phase is near.
Another biotech that investors think is on the precipice of greatness is Elan, though the setback its multiple sclerosis drug Tysabri recently suffered (yet again) was not what the doctor ordered. Regardless, its price has fallen to a very attractive level, and CAPS member maven12 believes that it is in the midst of a discovery phase that will help propel it forward with new partnerships:
Elan is being played by too many people who are just looking for a 'pop'. They're likely to continue to be disappointed; but ELN is in the middle of a number of important discoveries and their work in neurobiology (MS, Altzheimers, Parkinson's, Crohns -- yes, I know that's not a real area of neurons, coupled with their work in nano-technology related to drug delivery systems gives them a broad palate.) They are limited by the people they partner with -- such as Biogen with Tysabri. That's a partnership that appears to be made in hell relative to being able to exploit the advantages of T for MS sufferers, but over the long run the use of partnerships is going to pay dividends. They've partnered with Lilly, Wyeth, and a number of smaller firms. That'll diversify their product offerings and risk.
Their debt is worisome if the product line doesn't develop as planned, but it does appear to being developed as planned.
A great opportunity for you
These four-star investments could be on their way to five-star greatness, and it pays to start your own 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.
Sign up today for the completely free service, and let us hear what you have to say about the great -- and almost great -- companies that interest you.
