5 Stocks Approaching Greatness

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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
On Motley Fool CAPS, these opportunities can be found among our four-star stocks. In CAPS' proprietary ratings system, they rank higher than most of the other 5,300 starred companies, but they're just shy of superstardom. While all the attention might be focused on their five-star peers, we can sift through CAPS to find four-star companies that may be approaching greatness, like this handful.

• Almost Family (Nasdaq: AFAM)
• Berry Petroleum (NYSE: BRY)
• PetroQuest Energy (NYSE: PQ)
• Ship Finance International (NYSE: SFL)
• Oracle (Nasdaq: ORCL)

Some of these names might surprise you. Enterprise software specialist Oracle, for example, has been a household name since it emerged in the tech boom. Almost great? Even familiar names can still offer some of the best opportunities. Perhaps we've just forgotten the potential they still hold. However, the 130,000-plus CAPS members chose these companies as less obvious sources for tomorrow's great buys, so let's see why they might merit your attention.

In the sight of greatness?
With about half the cost of President Obama's planned reform of health care coming from new taxes, some analysts have suggested he has "punted" on the cost component. According to analysts at Health Policy & Strategy Associates, Obama is whittling only 3.5% from federal health-care spending, and that only by 2019.

But even those meager cuts might not be realized if Congress has its way. The versions of the federal budget passed by the House and the Senate a few weeks ago restored the funding the president had cut, serving to revive the prospects of some providers. The share prices of Almost Family, Gentiva Health Services, and Amedisys (Nasdaq: AMED) all rose at the better-than-expected outcome.

Home providers like those above have been targeted as likely places for cuts to be made. Almost Family, which recently reported earnings that should have helped its stock rebound from the doldrums of the past year, brought only a mild reaction instead. It provides home nursing services from more than 90 locations in 11 states along the East Coast. Revenue from the company's visiting nurse business more than doubled to $55.7 million for the fourth quarter, while personal-care revenue grew 16%, to $10.5 million. When Congress decided that it didn't have the courage to cut spending, it gave hope to the company.

At 10 times earnings, though, Almost Family's stock trades at its industry's average. While that's just about where Amedisys sits, it's a premium to other rivals, including industry leader Lincare Holdings (Nasdaq: LNCR), meaning that the budget process and Almost Family's own results this year need to remain on track.

Some investors believe that the worst of the Obama budget scare is over with, and that an aging population is good for the industry and Almost Family. CAPS member tmd6966 looks at these factors.

Sold off over worries about OBAMA HEALTHCARE (ie Medicare) in spite of 36% year over year growth last quarter. It is a tiny company, but [with] the huge number of Americans hitting 50 every month (70k per month), they are in the sweet spot demographically. This stock has tremendous momentum to the upside when it starts to move b/c so few shares outstanding.

Indeed, the International Association for Physicians in Aesthetic Medicine has even higher numbers: It says 12,000 Americans turn 50 every day!

A great opportunity for you
These four-star investments seem to be on their way to five-star status, 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.