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 analyze the 10 best stocks of the past decade. But I'm more interested in 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 160,000-member community is full of investors helping each other beat the market.
We'll enlist CAPS to screen for real estate 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
|
Gross Margin
|
CAPS Rating
(out of 5)
|
|
E-House (NYSE: EJ )
|
69.5%
|
****
|
|
Gramercy Capital (NYSE: GKK )
|
49.6%
|
***
|
|
Annaly Capital Management (NYSE: NLY )
|
40.5%
|
***
|
Data and star rankings from CAPS as of March 12.
E-House
E-House has directly benefited from China's booming housing market and recently posted soaring fourth-quarter earnings and revenue that more than tripled over the prior year. The company's gross floor area of new properties sold reached record levels in 2009 and the strong momentum has even prompted it to initiate a dividend this year. China's steps to keep its booming housing market in check may dampen the explosive growth that E-House has seen, but the company still forecasts a strong 2010, and many CAPS members expect the company to benefit from the long-term growth of the Chinese economy.
In CAPS, 95% of the 659 members rating E-House expect it to outperform the broader market.
Gramercy Capital
Real estate investment trust Gramercy Capital, which has tenants such as Bank of America and Regions Financial (NYSE: RF ) in its office and bank properties, has outpaced the S&P 500 by a wide margin over the past year. But on Monday, Gramercy succumbed to the commercial real estate reality noted by some CAPS members, as shares were hammered after the release of its fourth-quarter results.
The effect the sour economy has had on commercial real estate -- which is also taking down asset-light companies like LoopNet (Nasdaq: LOOP ) -- dragged Gramercy's funds from operations into negative territory, and resulted in a net loss for the quarter. The fate of its Realty division, which is expected to generate negative cash flow this year, is up in the air as the company explores "strategic options."
Still, after yanking earnings guidance and leaving investors with a hazy outlook, 95% of the 270 CAPS members rating Gramercy Capital remain bullish.
Annaly Capital Management
Annaly Capital has continued to take advantage of the current interest rate environment and recently posted huge GAAP and non-GAAP fourth-quarter earnings growth over the prior year, helped by strong growth in its interest rate spreads. While being a shareholder in Fannie Mae (NYSE: FNM ) and Freddie Mac (NYSE: FRE ) may pose plenty of risk, holding a portfolio of Fannie and Freddie securities that are backed by taxpayers shifts a lot of risk away from Annaly. The mortgage REIT says it's positioning itself for the future.
Meanwhile its 16% dividend yield has many fans in the CAPS community, with 88% of the 1,391 members rating the company believing it will beat the broader market.
Let 160,000 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 see more of a nightmare instead -- simply scroll down and add your thoughts in the comments box.
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