When a stock's share price is lower than 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's made that upward leap.
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 have recently enjoyed a bump in investor confidence and see whether they're truly heating up -- or headed back to the deep freeze.
|
Company
|
CAPS Rating
(out of 5)
|
Recent Price
|
EPS Estimates
(This Year - Next Year)
|
|
Best Buy (NYSE: BBY )
|
***
|
$41.88
|
$2.93 - $3.18
|
|
Bronco Drilling (Nasdaq: BRNC )
|
***
|
$5.83
|
($0.98) - ($0.79)
|
|
Home Depot (NYSE: HD )
|
***
|
$27.34
|
$1.51 - $1.66
|
|
Microvision (Nasdaq: MVIS )
|
***
|
$3.83
|
($0.53) - ($0.38)
|
|
Whole Foods (Nasdaq: WFMI )
|
***
|
$27.49
|
$1.10 - $1.22
|
Source: Motley Fool CAPS, as of Nov 13.
Obviously, this is not a list of stocks to buy -- just a starting point for further research. Yet if some of the best investing minds are taking notice of these stocks, maybe we should, too.
Caution: Contents may be hot
Private-label manufacturers have found a hot niche in the grocery aisles, but Microvision is expanding that concept to its microprojectors. In September, it said an Asian consumer electronics OEM had signed an initial purchase order for its plug-and-play portable projector for private-label manufacture.
Microvision's pico projector can essentially convert a mobile phone into a big screen projection device, though it faces competition from Texas Instruments (NYSE: TXN ) . And last month the tiny-projector maker says it had also signed up a distributor in Europe for its device, which will be sold by a top mobile phone operator. There seems to be some big things happening around this small company.
That could be why CAPS member xinetic finds Microvision's technology to be unstoppable and the company's stock ready to explode:
This Company is going to bring out a breakthrough mobile microprojector with really unstoppable technical specifications. I'm watching them for over a year now and the more details I get the more I think that this stock will explode in the next six months and later on rise for the next couple of years.
Why not add your opinion to Microvision's CAPS page on whether it will be able to project itself to bigger and better things?
Red-hot or ice-cold?
Even if I agree with the opinions of Whole Foods CEO John Mackey on the lack of taste the health-care debate offers, that doesn't mean I think it's time to stock up on his high-priced grocer's stock. Mackey says they've turned the corner on the recession, but Wal-Mart Stores (NYSE: WMT ) remains a tough competitor.
Sure, you can't compare the presentation at Whole Foods to what you'll find at the discount supercenter -- CAPS member calgirl87 says Whole Foods is a sumptuous feast for the eyes -- but the stock's valuation is no picnic. Even after giving up some 15% following a less-than-filling earnings report, shares still trade for 22 times forward earnings estimates, and analysts expect around 16% profit growth for the next half-decade. Wal-Mart, with only slightly less robust 12% growth estimates, is trading at just 13 times next year's earnings.
Many times you can't separate a company from its charismatic CEO -- think Steve Jobs or Bill Gates -- and the same applies when it comes to Whole Foods. For Tomcat1066 it is John Mackey who makes or breaks how the food king fares:
Two words: John Mackey, their CEO. He built the company and has helmed it through out the company's existence. He has a good head and good ideas that will pan out well for Whole Foods.
Use the comments section below to tell us whether investors should dine on Whole Foods stock or if it should be scraped into the waste bin.
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 own thoughts on which stocks you think are hot little numbers, and which offer cold comfort. It's free to sign up.
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