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 125,000-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 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 were rated one or two stars, but 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 EPS Growth
|
|
DeVry (NYSE: DV)
|
***
|
$57.12
|
25%
|
|
Lincoln National (NYSE: LNC)
|
***
|
$16.35
|
13%
|
|
Quiksilver (NYSE: ZQK)
|
***
|
$1.58
|
21%
|
|
Roper Industries (NYSE: ROP)
|
***
|
$39.73
|
(4%)
|
|
Scotts Miracle-Gro (NYSE: SMG)
|
***
|
$28.45
|
15%
|
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
With commercial property developers like General Growth Properties (NYSE: GGP) seeing potential trouble in the industry, insurers, which have about 10% of their invested assets in commercial mortgages, should beware. Ratings agency Moody's (NYSE: MCO) sees Lincoln National taking the necessary steps to bolster its finances and maintain a strong market position in life insurance and annuities, although it reduced its outlook on the company to negative because of industry pressures.
Earlier this month, CAPS member BrodieMan720 saw Lincoln National as an opportunity.
Like others, I'm saying that this is a beat-down company in an area where too many are afraid to venture. Sure, their EPS dropped big time, but it's steadily increasing again, like in previous quarters. I especially like their debt to equity compared to their sector. Good cash on hand to weather storms, as well.
Another reason I like it is, of course, the dividend, which is yielding well, and increasing every year. I haven't read, or heard, or know if they had to slash dividends to cover everything, but if previous trends continue, I think it's going to go back up.
The Quik(silver)
The latest sales reports for the holiday season suggest that retail remains a particularly harsh arena. Even huge discounts couldn't save the season, particularly for luxury retailers, whose sales fell 35%. Ski and skate clothing retailer Quiksilver, however, reported last week that it narrowed its losses for the quarter on a 3% increase in sales.
That's not enough to convince some investors, like CAPS member cdupont03, who thinks the market for retailers doesn't hold much more promise.
Looking for a big drop in retail stocks over the next few months. Not a bad company but things dont look well, specifically in the targeted demographic.
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?
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