In music, they're called one-hit wonders, artists that belt out a memorable tune but are never able to regain the magic of that big hit song. Think Norman Greenbaum's "Spirit in the Sky" or Brownsville Station's "Smokin' in the Boys Room" -- monster hits never to be repeated.
We've seen similar one-hit wonders in stocks, too, such as Pets.com or drkoop.com. These companies burst onto the scene -- many during the tech-bubble heyday -- bit never live up to the promise they held.
Whole lotta shakin' going on
Nostalgia is fun, but "10 Stocks to Shake the Market" is all about avoiding stocks that can't repeat their success. We want to find those that have made big moves and are likely to continue doing so.
To do that, we're looking at 10 stocks that made some of the biggest moves upward over the past month. We'll then pair that information with the ratings from our Motley Fool CAPS community. High ratings from our CAPS members suggest an optimism that those stocks will continue to move upward and outperform the market.
In the 20 months since we began tracking the collective intelligence at CAPS in late 2006, the data shows that newly minted five-star stocks offer the best opportunities for investors, while the lowest-rated companies fared the worst. Four-star stocks outperformed the market by seven percentage points, and five-star stocks -- top honors in CAPS -- did even better.
|
Stock |
30-Day % Change |
CAPS Rating (out of 5) |
|---|---|---|
|
Mentor |
90.9% |
** |
|
Force Protection |
73.6% |
*** |
|
Conseco |
63.4% |
** |
|
Aecom Technology |
45.1% |
**** |
|
Aurizon Mines |
44.4% |
*** |
|
Vonage |
43.2% |
* |
|
Cogent |
42.6% |
***** |
|
Omrix Biopharmaceuticals |
38% |
***** |
|
Vaalco Energy |
35.1% |
***** |
|
Internet Initiative Japan |
32.1% |
***** |
Source: Motley Fool CAPS.
Most of the stocks above have a rating of three stars or better. Let's zero in on some of those companies and look at why CAPS members think they'll continue to outperform.
Mentor
In a recession -- yes, the government finally admitted we've been in one for the past year -- you'd expect a sector such as elective cosmetic surgery to face some pressure. Sure enough, that's been the case for breast-implant maker Mentor. Yet the stock got a nice boost when pharmaceutical giant Johnson & Johnson
Control 50% market share for breast implants, including the new [silicone] implants. Other cosmetic medical products to supply our fragile [egos]. Stock will continue to rise as we work ourselves out of this recession and once again get to spend extra money on things that really matter like breast implants.
Conseco
Long-term care insurance is vitally important to your financial health, and you should consider getting some as you work your way into middle age. For insurer Conseco, however, writing thousands of underpriced long-term care policies weighed heavily on earnings. To avoid needing to make additional capital injections to support the policies, Conseco transferred the policies to a trust, a move that allowed the company to concentrate on its core business.
CAPS member PViddy already suspected in October that despite reporting horrible earnings, Conseco remained an otherwise good value investment because of a fairly healthy balance sheet.
Earnings have been terrible, but balance sheet is still strong. The market capitalization is approaching the value of cash on hand. Good value play.
Shake, rattle, and roll
With these stocks shaking the market this past month, it pays to start your own research on them at 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.
