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 ratings system, they rank higher than most of the other 5,400 starred 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 approaching greatness, like these:
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JA Solar
(NASDAQ:JASO) -
Stillwater Mining
(NYSE:SWC) -
Stone Energy
(NYSE:SGY) -
Take-Two Interactive
(NASDAQ:TTWO) -
Vale
(NASDAQ:VALE)
Some of these names might surprise you. Stone Energy, for example, is a hard-charging oil and gas E&P player operating in the Gulf of Mexico and Appalachia. Yet even familiar names can still offer some of the best opportunities. Perhaps we've just forgotten the potential they still hold. However, the 145,000-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?
Does this possible deal stink? Metals and mining specialist Vale is looking to acquire the Brazilian fertilizer operations of global agribusiness leader Bunge, a deal valued at as much as $3.8 billion.
On the surface the proposition looks good, and analysts approvingly note Vale will be diversifying its mining business. Nor would it be its first foray either into the fertilizer market. In 2003, Vale actually sold to Bunge for $83 million its stake in these same operations it wants to buy. With a potash mine under development in Brazil, Vale has been looking to make fertilizer a much bigger component of its overall revenue stream. Last year it bought potassium assets in Canada and Argentina and apparently even tried to buy up fertilizer maker Mosaic
Yet it can't be overlooked that Bunge is exiting the market probably because of Brazil's decision to overhaul the regulatory and tax scheme in the country as it applies to mining operations. It also puts it in direct competition with other fertilizer giants, such as PotashCorp
As the world's largest producer and exporter of iron ore, however, CAPS member SpiffGriff sees Vale as a play on the continued growth of the Brazilian economy:
Vale offers investors several different benefits: they are a play on both Brasil and the Emerging Markets of South America and are one of the best positioned stocks to benefit from post-recession recovery.
Why not head over to the Vale CAPS page and discuss whether this buyout is as rank as moldy fertilizer or will help the company grow like crazy.
That's not gold that's glittering
Stillwater Mining is another mining operation that investors can see rewarding them with a big payoff, particularly as two new exchange traded funds came on the market last week with policies that ought to bolster their operations.
ETFS Physical Platinum Shares and ETFS Physical Palladium Shares will take physical possession of the respective metals, securing in vaults in London and Switzerland bullion in both plate and ingot form. At least one analyst thinks this would increase demand for the metals. While South Africa is largest producer of platinum group metals, Stillwater is the only U.S. producer of palladium, operating what is the richest known deposit in the world located right in Montana.
CAPS member sprint17 wrote just last week that with it being rarer than gold and having more industrial uses, palladium is sure to shine:
Production increased while capital expenditures decreased (albeit due to layoffs) for 2009. How investors and traders will take this seemingly good news is unknown. I was lucky enough ... the past few weeks and closed most of [my shares] out yesterday (along with my green thumb). Thanks to this good news I am re-opening my pick and hoping to ride it up another 20%. Palladium and Platinum are more industrially more useful and rarer than gold, I believe the price of the [platinum group metals] will go up and carry its largest producers with it.
A great opportunity for you
Investor sentiment suggests these four-star investments still 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.
