Investors are always hunting for the next big stock -- the dream stock whose price increases several times over when the market finally discovers it. It's easy to look back and discover the 10 best stocks of the past decade. But I'm more interested in the tools that can help me evaluate tomorrow's greatest companies.
Motley Fool CAPS offers a variety of resources to aid Fools in finding tomorrow's leaders. Our 130,000-member community is full of investors helping each other beat the market.
We'll enlist CAPS to screen for contrarian stocks -- quality companies that may be temporarily oversold -- then get the story behind some of its more highly rated ones. CAPS' nifty screener will help us find stocks with:
Then we'll tap the collective intelligence of our CAPS members to see whether these companies present real opportunities -- or whether the numbers fail to tell the true story.
Opinions with the numbers
Below is a sample of stocks our screen returned. You can run this screen yourself -- remember, though, that your results may differ from ours as the market changes.
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Company
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EPS Growth Rate, Past 3 Years
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% Below 12-Month High
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CAPS Rating (out of 5)
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Mechel (NYSE: MTL )
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57.9%
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84.9%
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*****
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Noble (NYSE: NE )
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51.3%
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55%
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*****
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McDermott (NYSE: MDR )
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17.9%
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70.6%
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*****
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Data and star rankings from CAPS as of May 22.
Mechel
Just as domestic steel companies like U.S. Steel (NYSE: X ) and Nucor (NYSE: NUE ) have been crushed over the past year, Russia's Mechel and other foreign companies like ArcelorMittal (NYSE: MT ) have similarly felt the effects of lower steel demand. Reduced demand from construction and machinery industries led to dramatically lower production of both coking coal and steel in Mechel's first quarter. The company has a mix of mining, steel, ferroalloys, and power, and it's been shifting some focus towards higher output of higher-margin products to offset volume declines.
And despite risks associated with a heavy-handed Russian government, many CAPS members have a bullish outlook for Mechel as increased global infrastructure spending and an economic turnaround will rejuvenate the company's performance over the long haul. In CAPS, 97% of the 1,616 members rating Mechel expect it to outperform the market.
Noble
Although oil prices have tanked from the highs seen last year, oil and gas drilling services companies like Noble and Diamond Offshore Drilling have managed to maintain and even grow earnings in their most recent quarters thanks to the benefit of long-term contracts for deepwater rigs. At the end of the first quarter, Noble still maintained a $10.6 billion backlog and generated higher margins over its previous quarter. With a strong balance sheet and tier-1 customers like Petrobras (NYSE: PBR ) and Royal Dutch Shell anchoring the company, many CAPS members see a promising future for Noble. In fact, Noble has maintained a five-star rating for more than two years, and nearly 99% of the 1,902 CAPS members rating the company today expect it to outperform the market.
McDermott
Engineering and construction company McDermott brings in business from a diversified list of major offshore energy projects with well-funded customers, power-generation business with major utilities, and government contracts -- a fact that has many CAPS members bullish on its future. It's experienced some slowing growth and issues with a fixed-price contract in Qatar recently but still has a solid backlog of $10 billion.
Like its peer Fluor, it's seen strong demand from the oil and gas industries, which provide around half of its revenues, as well as the U.S. government. And with a large part of its revenue coming from international projects, it's also poised to benefit from global energy infrastructure spending. With a stock still less than a third of its peak value last year and plenty of promise, nearly 98% of the 1,332 CAPS members rating McDermott are bullish today.
Let 130,000 members be the jury
The collective wisdom of a huge pool of investors can help give context to a page of numbers from a stock screen -- but individual investors are still the best judge. Fools should always perform their own due diligence.
Run your favorite factors through the Motley Fool CAPS screener. It's totally free, and we think you'll like the results.
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