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 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 approaching greatness. Here is a handful:

• ClickSoftware Technologies (Nasdaq: CKSW)
• Dow Chemical (NYSE: DOW)
• Internap Network Services (Nasdaq: INAP)
• Kraft (NYSE: KFT)
• Zix (Nasdaq: ZIXI)

Some of these names might surprise you. Consumer goods giant Kraft, for example, has been a household name for generations, though it has only been two years since it was spun off from Altria. 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 140,000-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?
ClickSoftware helps businesses stay on schedule, and more importantly on -- or under -- budget. Its products help clients schedule, monitor, and manage their service operations, with the goal of increasing efficiency and reducing costs.

CAPS member EnigmaDude recently wrote that the corporate efficiency specialist had a schedule of its own that he was able to profit from.

I recently read how in each of the past 6 quarters the stock has run up prior to the earnings report and then drops on the news (or the next day). 

Fortunately, I was able to take advantage of this bit of historical knowledge. I sold my shares at $7.75 yesterday and today their earnings report came out. Although they reported record profits and forecast inline with estimates for next quarter, the share price plummeted nearly 20%. I added more shares today at the new, lower price of $6.40.

There is some evidence to support that idea, though it's hardly conclusive. I found it more intriguing that ClickSoftware has climbed fairly steadily over the past year, as Accenture (NYSE: ACN), IBM (NYSE: IBM), and others have helped integrate and implement its software for customers to contain their costs. ClickSoftware's stock responded in kind, rising more than 120% in the past 12 months and more than 170% this year alone. That seems to underscore the opinion of ChetGib, who is buying and holding.

For me . . . I bought Click for the long term based on criteria for growth. That potential does not go away based on 1 days reaction to next quarters performance. If I had the cash, I would buy more now.

The market's reaction to the latest earnings report was predicated on ClickSoftware's forecast of fourth-quarter revenue that would be flat or down compared with the third quarter, even though they'd still be as much as 14% higher than a year ago. With the acquisition two weeks ago of AiPoint, an Israeli company with similar decision support solutions, ClickSoftware will move into fields such as retail, telecommunications, transportation, and utilities.

The stock is down more than 25% from the high point it reached just before the earnings report came out last week. Trading for less than its projected earnings growth rate and with a clean, no-debt balance sheet, ClickSoftware just might prove to be nimble enough to go higher, just as EnigmaDude anticipates.

Tell us what you think about it on ClickSoftware's CAPS page.

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.