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 rated 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 might be appealing.
- Coeur d'Alene Mines (NYSE: CDE )
- Delta Petroleum (Nasdaq: DPTR )
- Marvell Technology (Nasdaq: MRVL )
- Silver Standard Resources (Nasdaq: SSRI )
- Travelers (NYSE: TRV )
Some of these names might surprise you. Insurance provider Travelers, for example, has been around for years. Almost great? Even familiar names can still offer some of the best opportunities. Perhaps we've just forgotten the potential they still hold. However, some of the 135,000-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?
Silver Standard Resources hasn't enjoyed the same rally that gold and other commodities have experienced this year, which suggests that it might be ready for a big jump. The gold-to-silver price ratio has historically been about 20 to 1, and last year it was sitting at around 50 to 1. Today, with gold at $955 and silver at about $14 an ounce, the ratio has widened even further, to around 68 to 1.
An adventurous investor might find a good motive to buy Coeur d'Alene Mines and Silver Standard Resources, because some CAPS members think well of both. Member Kingballer12 likes Coeur d'Alene Mines:
[Coeur d'Alene Mines], another strong commodity company in silver. They recently opened their new mines and taken measures to strengthen their balance sheets, reduce long-term debt, and have low cost.
With gold and silver historically woven together, silver should eventually rise, too -- or so the theory goes. And silver might have help from an ailing dollar. Now that the dollar is trading near its lowest levels of the year against six major currencies, it's quite possible that those forces could push silver higher soon. In May, CAPS All-Star gea1968 linked the dollar to demand for gold: "A falling dollar means that investors all over the world will want to put their money into two places: non-US stock markets, and tangible assets such as gold."
It has been a rough time for the stocks of silver miners, down on average about 35% over the past year. Many companies regained a lot of that lost ground this year, with some of the smaller names such as Silvercorp Metals (NYSE: SVM ) gaining the most -- climbing more than 71% year to date.
A decline in the dollar might also explain the rise of independent oil and gas exploration companies such as Isramco (Nasdaq: ISRL ) , whose industry also was rocked by the collapse of the commodities market last year and has rebounded strongly in 2009. Isramco's stock price has more than quadrupled year to date.
But Delta Petroleum has missed out on the oil rally. CAPS member bombayboy82 believes the company can come back.
Gas prices will never drop below $2 unless there is a global meltdown. Plus Natural Gas is on the way up. Insider trading is high which indicates that company execs are onto something here.
Billionaire investor Kirk Kerkorian owns a substantial stake in the business, which might be viewed as a vote of confidence for the company's long-term potential.
A great opportunity for you
Investor sentiment suggests these four-star companies still seem to be on their way to five-star greatness, but 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's hear what you have to say about the great and almost-great companies that interest you.
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