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 150,000-member community is full of investors helping each other beat the market.
We'll enlist CAPS to screen for Internet 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
Here's a sample of stocks our screen returned:
|
Company
|
Gross Margin
|
CAPS Rating (out of 5)
|
|
S1 (Nasdaq: SONE )
|
56.0%
|
****
|
|
NetEase.com (Nasdaq: NTES )
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84.6%
|
***
|
|
CDC (Nasdaq: CHINA )
|
56.7%
|
***
|
Data and star rankings from CAPS as of March 5.
S1
As technology increasingly simplifies and automates the movement and management of money, investors like the toehold that financial services software provider S1 has in the market. Even as banks like Citigroup (NYSE: C ) and Bank of America still try to shake the recession, S1 recently reported an 86% jump in fourth-quarter earnings, thanks to a slight uptick in revenue and a drop in expenses.
The company has a wide range of solutions for banks and consumers to conduct transactions. It's also tapping growing trends by teaming up with eBay's (Nasdaq: EBAY ) PayPal to enable consumers to send payments on their wireless phones. And with the recent acquisition of PM Systems, a provider of Internet banking for credit unions, S1 is adding both new clients and a recurring revenue model that can boost its top line.
CAPS members generally like the progress that S1 has made. Nearly 96% of the 119 members rating S1 expect it to outperform the broader market.
NetEase.com
With one of the top market-share positions in China's online gaming sector, and strong titles like Activision Blizzard's (Nasdaq: ATVI ) World of Warcraft, many CAPS members have a hard time finding reasons not to be bullish on NetEase.com.
The Chinese online firm pulled in big revenue growth in its most recent quarter, and investors believe the company can overcome China's ever-shifting regulatory hurdles. Since a large portion of NetEase's revenue comes from online gaming, many CAPS members expect it to benefit from that rapidly growing market. In CAPS, 96% of the 1,082 members rating NetEase.com expect it to beat the market.
CDC
Several growth possibilities among CDC's family of companies strike a bullish chord with CAPS members. Its software business has busily made acquisitions, focusing on expanding its sales channels into emerging high-growth regions like Brazil, Russia, India, and China. Like other enterprise-software companies such as Infosys and Oracle (Nasdaq: ORCL ) , CDC anticipates building momentum for core enterprise applications as businesses start spending money again.
But the best to come may lie in CDC's gaming division, which is releasing hit titles like The Lord of the Rings in China. Roughly 95% of the 849 CAPS members rating CDC have given it a bullish vote to beat the S&P.
Let 150,000 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 remain 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 instead -- simply scroll down and add your thoughts in the comments box.
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