However hard the market slams a stock, there's always the chance it'll come bouncing right back. We'll consult our Motley Fool CAPS community to find shares on the rebound, examining one specific sector of the economy in search of companies with rising CAPS ratings.
Among the more than 518 stocks listed under basic materials in the CAPS' screener, we've unearthed more than a few with high five-star ratings. That means some of our 140,000 CAPS members are confident that these stocks will beat the market in the months ahead. Let's see what members are saying about the five companies below:
|
Company
|
CAPS Rating Today
|
Recent Price
|
52-Week Price Change
|
Estimated Long-Term Growth Rate
|
|
ATP Oil & Gas (Nasdaq: ATPG )
|
*****
|
$17.51
|
187%
|
15%
|
|
Landec (Nasdaq: LNDC )
|
*****
|
$6.29
|
(14%)
|
23%
|
|
Noble (NYSE: NE )
|
*****
|
$43.74
|
60%
|
11%
|
|
Unit (NYSE: UNT )
|
*****
|
$40.25
|
38%
|
10%
|
|
Vale (Nasdaq: VALE )
|
*****
|
$28.05
|
147%
|
2%
|
Source: Motley Fool CAPS; Yahoo! Finance.
Along with the broader markets' pretty bold recovery since their depths back in March, the average basic materials stock has had a pretty strong run-up, too, with values up almost 80% from the year-ago period. While some companies like Landec and Century Aluminum (Nasdaq: CENX ) have not fared as well, others such as ATP Oil & Gas and Horsehead Holding (Nasdaq: ZINC ) have doubled or more. Horsehead is up more than 250% over the past year.
So let's take a closer look at why some investors think some of these companies won't be jumping from the frying pan into the fire.
Some spring in its step
Deepwater driller Noble has proven itself capable of taking on all comers even in the pits of an industrywide downturn, as contract drilling revenue for the third quarter rose 5% from last year and margins maintained their strength. More importantly, Noble has a solid backlog, giving it a clear understanding of where its earnings and cash flows will come from for the next few years.
Although that backlog includes nearly $750 million worth of contracts from the Mexican government's Pemex, which has the right to cancel them with 30 days notice or less, Noble doesn't expect such cancellations to occur. Its contracts also give customers the right to cancel without penalty if Noble fails to live up to certain performance standards, but again, company officials don't anticipate that will happen.
With those caveats aside, along with a recognition that Noble's jack-up market has been deteriorating and holds potential for cancellations, the driller still presents investors with a solid opportunity. CAPS member ratliah0 really can't find a bone to pick with Noble.
Noble is a steady, proven offshore company whose stock should rise substantially as energy supplies continue to tighten and offshore drilling demand rises. Noble operates a fleet of 62 offshore rigs that drill for oil and natural gas globally and most of its customers have exceptionally deep pockets; about 60% of its customer base is national oil companies. Also, Noble's management team is top notch, delivering some of the best returns on capital and operating margins while also keeping the company in excellent shape fiscally.
Out of gas?
That pickup in driller demand may be spreading to the onshore market as well, with oil services provider Unit recording a better-than-expected increase in profits for the latest quarter. That's not to say the business is particularly healthy just yet; after all, revenues fell 71% year over year and earnings were just a third of what they were in 2008. But it wasn't as dire as Wall Street had anticipated, and while utilization rates remain depressed, management says it's starting to string together the signs of increased drilling activity.
Rivals Parker Drilling and Allis-Chalmers aren't so sure, though they do agree things are better than they have been.
Some investors remain excited about Unit, however. Of the more than 1,500 CAPS members rating the oil services company, 99% pick it to outperform the market benchmarks. Unit's recovery, though, has pretty much kept pace with that of the broader Energy Equipment and Services sector on CAPS, which has risen 38% over the past year.
The ball's in your court
There are many factors that go into whether a stock is a buy or a sell, so 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. Head over to CAPS today and share your thoughts on whether you think these stocks are ready to bound higher.
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