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 160,000-member community is full of investors helping each other beat the market.
We'll enlist CAPS to sift through the rubble and screen for financial firms, then get the story behind some of its more highly rated stocks. CAPS' nifty screener will help us find stocks with:
- A market cap of at least $100 million.
- A three-year revenue growth rate of at least 15%.
- A price-to-earnings ratio of less than 25.
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
|
|---|---|---|
|
EZCORP |
20.1% |
**** |
|
National Bank of Greece |
18.4% |
**** |
|
Ares Capital |
23.3% |
*** |
Data and star rankings from CAPS as of March 26.
EZCORP
Business has been good for EZCORP through the recession; the company's shares have been on an upward path for the greater part of the past year. The company provides pawning services and financial liquidity to consumers in the form of short-term loans, mainly serving customers who don't have access to an American Express
With a 44% increase in revenue and 73% jump in earnings in its most recent quarter, many CAPS members see a lot of promise in the company, and its expansion into international markets only adds to its growth potential. At this point, nearly 97% of the 532 CAPS members rating EZCORP expect it to be a market-beating investment.
National Bank of Greece
Many CAPS members are taking a contrarian approach toward National Bank of Greece and are placing their bets in favor of an eventual turnaround, despite the debt troubles of the nation and the potential risks to the Eurozone. The bank recently reported a 40% drop in 2009 earnings and expects more challenges in 2010, but also noted a few positives, like growing net interest income and a strong tier one capital ratio.
Greece has made progress in securing assistance from its Eurozone neighbors and the International Monetary Fund, and although some CAPS members see the stock as a gamble, others see the chances of a positive outcome as quite good. Good enough in fact for 97% of the 705 CAPS members rating National Bank of Greece to give the stock a thumbs-up.
Ares Capital
Small business lender Ares Capital has not only been a survivor of the economic downturn, but it has been gaining momentum with its recent earnings growth and improving liquidity. The company is expanding aggressively as it continues to look for attractive investment opportunities -- as with its pending merger with competitor Allied Capital
Analysts are looking for the earnings growth to continue in the consolidated company, and a solid group of CAPS members share the bullish outlook. Many take a particular fancy to the hefty dividend -- which now sits around 9.5% -- that Ares has managed to maintain. In CAPS, 94% of the 307 members rating Ares Capital expect it to outperform 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.
