When a stock's share price is lower than the mercury in a North Dakota thermometer in February, investors tend to give it the cold shoulder. But as the market warms to a stock's prospects, its price can heat up in a hurry. Alas, you can rarely tell that a stock is melting investors' hearts until after it has made that leap up.
Taking the market's temperature
But Motley Fool CAPS' proprietary ratings, aggregated from the opinions and accuracy of 140,000-plus members, offer a great way to monitor investor sentiment. Following a CAPS rating trend can help us determine the best time to invest. Let's look at previously rated one- or two-star companies that recently enjoyed a bump in investor confidence and see whether they're truly heating up -- or headed back to the deep freeze.
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Company
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CAPS Rating (out of 5)
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Recent Price
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EPS Estimates (This Year-Next Year)
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Goldman Sachs (NYSE: GS )
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***
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$173.40
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$18.88 - $18.10
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Research In Motion (Nasdaq: RIMM )
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***
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$57.79
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$4.16 - $4.88
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DryShips (Nasdaq: DRYS )
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***
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$6.14
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$1.06 - $0.99
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Oncothyreon (Nasdaq: ONTY )
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***
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$4.08
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$0.64 - $0.53
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Goldcorp (NYSE: GG )
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***
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$40.44
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$0.68 - $1.03
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Source: Motley Fool CAPS.
Obviously, this is not a list of stocks to buy -- just a starting point for further research. Yet if some investors are taking notice of these stocks, maybe we should, too.
Caution: Contents may be hot
Can Merck KGaA give Oncothyreon a booster shot? The German pharmaceutical (unrelated to the U.S. drugmaker) bought the rights to Oncothyreon's Stimuvax vaccine back in 2001 and is hoping to roll it out in a big way by 2012, but it's taking an unorthodox approach with the potential for a big payoff -- as well as a big flop.
Merck is enrolling more than 900 women in an experiment to treat breast tumors before it has any evidence from other studies whether the product even works. If the strategy pays off, Merck says, Stimuvax could generate $1 billion annually, though some analysts offer much lower numbers. Even so, one sees it at least doubling sales in a few years if it wins regulatory approval.
A failure, though, would set both Merck and Oncothyreon back, and results with other therapeutic vaccines haven't been particularly encouraging lately. Antigenics (Nasdaq: AGEN ) is said to be the only company to have successfully launched such a product, and then only in Russia when its U.S. attempt was dealt a blow. Provenge for Dendreon (Nasdaq: DNDN ) is expected to hit the market next year.
Oncothyreon has flown beneath the radar for the most part, but with Merck planning to be aggressive with Stimuvax, more investors could become interested. CAPS member exodus69 is hoping the company will follow Dendreon, though without all the drama.
Could be potentially similar to DNDN. Great pipeline with cancer vaccine already in phase 3 trial. Partnership with Merck only helps it getting closer to FDA approval.
Add your opinion on Oncothyreon's CAPS page on whether Merck will be able to win FDA approval for Stimuvax.
Red hot or ice cold?
On the outrage scale, Goldman Sachs jumping ahead of everyone else for scarce swine flu vaccines for its employees probably ranks fairly low. It might be a bit more outrageous that it's trying to buy Fannie Mae's tax credits to offset the record profits it earned only a year after the U.S. taxpayer bailed it out -- even as it gets ready to dole out billions in bonuses. Dodging its tax obligation by using the tax losses of a government-owned entity certainly rankles some of us.
Yet getting a phone call from the family doctor to cancel an appointment for a flu shot because of a shortage of vaccine does tend to move the outrage needle for me. There's a reason why people have resorted to calling it Government Sachs: It often looks like the government, its laws, and its tax rules are being written to benefit CEO Lloyd Blankfein & Co.
Goldman does make it difficult to prevent animosity from running amok -- daily it rubs our noses in how it's so much better than the rest of us. SwingCorey is angry, too.
Ruining the economy with bailouts; putting politicos in positions of power; now shoving to the front of the line for flu shots?!?
Is it capitalism gone awry, or does Goldman Sachs represent the worst of cronyism? Use the comments section below to tell us what you think.
Checking the mercury
Are these stocks invitingly warm or bitterly frosty? It pays to start your 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. Then weigh in with your thoughts on which stocks you think are warming up and which offer cold comfort. It's free to sign up.
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