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 approaching greatness. Here are a handful.

• Altria (NYSE: MO)
• Amylin Pharmaceuticals (Nasdaq: AMLN)
• CME Group (NYSE: CME)
• Intuitive Surgical (Nasdaq: ISRG)
• iShares Silver Trust (NYSE: SLV)

Some of these names might surprise you. Cigarette giant Altria, for example, has endured years of litigation, spun off Philip Morris International (NYSE: PM) to focus on the domestic market alone, and hid behind a made-up name to cover its relationship to the cigarettes it makes. Almost great? Even familiar names can offer some of the best opportunities. Perhaps we've just forgotten the potential they still hold. However, the 140,000-plus-member CAPS community 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?
Exchange-traded funds offer investors an accessible means of trading in a sector without having to determine which company will be the eventual winner. While many precious-metals miners might ultimately win if inflation returns with a vengeance as many fear, betting on the actual metal itself, whether it's gold or silver, is an easier method of enjoying the increase in its value.

Thus with Peter Schiff predicting gold will hit $5,000, and silver expected to come along for the ride, buying SPDR Gold Shares (NYSE: GLD) or the iShares Silver Trust provides investors with a hedge against inflation. Both stocks actually have assets backed by the precious metals rather than investments in specific companies mining or trading them. CAPS member Smittyh sees a basket of commodities ultimately becoming more valuable:

Inflation is coming. It will not take a year for the printing of money to catch up with the value of a dollar. Commodities and mining will reap huge profits as the dollar devalues. My favorites are silver, zinc, copper and gold.

Time to bulk up
It's a standard of comedians that the list of possible side effects from a drug is oftentimes worse than the actual illness itself. If the disease doesn't kill you, the cure will. The Fool's pharmaceuticals guru, Brian Orelli, notes that all the FDA fire bells ringing in the night might actually desensitize doctors to real dangers in some medications. When everything's a risk, then there's no need to discern meaningful differences.

This all came to pass recently in part because of the regulatory agency's alarmist note that some patients on diabetes drugs Januvia and Janumet develop pancreatitis. That was the same warning the FDA gave to Amylin Pharmaceuticals' Byetta that ultimately sank sales. Lacking in the warnings is context: How many would have developed the condition anyway since diabetics are prone to develop pancreatitis, along with the miniscule number contracting the illness relative to those who are taking the drug.

Since then, Amylin and partner Eli Lilly restructured things to cause a resurgence in sales and place in their hands a potential blockbuster. While CAPS member topsecret09 thinks the stock sales by a top institutional shareholder are a warning sign, jo1935 has looked at Amylin's valuation across a variety of metrics and finds it to be relatively cheap:

Market Cap is 1.87 B. Stock currently trading lower than Market Indexes. Reports indicating that net earnings and operating losses for the 6 months ending in June are down. Analyst recommends are mixed. Valuations are less than industry average. Growth TTM greater than prior TTM. Profit Margins are greater than industry 50 percentile mark. Returns are near or greater than industry 50 percentile mark. Debt ratios are high. Operating Metrics are acceptable. Institutional Stock and Mutual Fund ownership is 93.5%. Finances balance. Short term outlook is bearish. Intermediate and long term is bullish.

A great opportunity for you
Investor sentiment suggests these four-star investments 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 us hear what you have to say about the great and almost-great companies that interest you.