Investors are always hunting for the next big stock -- the dream stock whose price increases several times over when the market finally discovers it. It's easy to look back and discover the 10 best stocks of the past decade. But I'm more interested in the tools that can help me evaluate tomorrow's greatest companies.
Motley Fool CAPS offers a variety of resources to aid Fools in finding tomorrow's leaders. Our 145,000-member community is full of investors helping each other beat the market.
We'll enlist CAPS to screen for financial companies, then get the story behind some of its more highly rated stocks. CAPS' nifty screener will help us find stocks with:
Then we'll tap the collective intelligence of our CAPS members to see whether these companies present real opportunities, or whether the numbers fail to tell the true story.
Opinions with the numbers
Below is a sample of stocks our screen returned.
|
Company
|
Revenue Growth Rate,
Past 3 Years
|
CAPS Rating
(out of 5)
|
|
NorthStar Realty Finance (NYSE: NRF )
|
132.6%
|
****
|
|
Hudson City Bancorp (Nasdaq: HCBK )
|
21.7%
|
***
|
|
HSBC (NYSE: HBC )
|
17.0%
|
**
|
Data and star rankings from CAPS as of Dec. 31.
NorthStar Realty Finance
Although commercial real estate may be out of favor with investors right now -- and the sector has a good chance of being the next economic shoe to drop -- some CAPS members see potential upside for real estate investment trust North Star Realty Finance and like its monster 11.7% dividend yield.
It recently announced a three-year extension of its Wells Fargo (NYSE: WFC ) bank debt and has no corporate debt maturities until 2012, which helps keep its liquidity position strong. And the company sees a bright side to the challenges ahead. Even though more real estate defaults threaten the balance sheets of big banks like Bank of America, there may be opportunities for NorthStar to pick up discounted assets from distressed sellers.
About 95% of the 626 CAPS members rating North Star Realty Finance expect it to outperform the market.
Hudson City Bancorp
Regional banks like Hudson City Bancorp and New York Community Bancorp (NYSE: NYB ) , which have held up better during the recession than peers like SunTrust and Fifth Third Bancorp (Nasdaq: FITB ) , have gotten more bullish nods from CAPS members in recent months. Hudson City reported strong third-quarter earnings while growing deposits, and managed to grow its deposit share in the vast majority of its locations through much of the downturn.
Many investors like the quality of loans in Hudson City's portfolio and its strong history of growing dividends, and see potential for less risky growth than many larger banks. In CAPS, 92% of the 538 members rating Hudson City Bancorp are bullish.
HSBC
Despite the volatile global financial market, some investors like the expanding global footprint of HSBC and see opportunities as it shifts toward a stronger focus on its growth in Asia. It already generates a large portion of its earnings from China and the Asia-Pacific region, and after big subprime losses in the U.S. and declining credit demand in Europe, the bank is looking to refocus on its Asian presence -- a move popular with others like Morgan Stanley (NYSE: MS ) and Credit Suisse.
But even though it is eyeing an IPO in Shanghai, the recent flood of lending by Chinese banks could spell tighter margins in the country, and some investors still have a sour taste from loan losses and exposure to troubled markets like Dubai, leading to a lowly CAPS rating of two stars. Just 68% of the 703 CAPS members rating HSBC expect it to beat the broader market.
Let 145,000 members be the jury
The collective wisdom of a huge pool of investors can help give context to a page of numbers from a stock screen. But individual investors are still the best judges of what to do with their own money. Fools should always perform their own due diligence.
Happily, it's easy to chime in with your own opinion. If you agree that these companies present dream opportunities -- or if you see more of a nightmare -- simply scroll down and add your thoughts in the comments box.
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