When a stock's share price is lower than a North Dakota thermometer in February, investors tend to give it the cold shoulder. But as the market warms to a stock's prospects, its price can heat up in a hurry. Alas, you can rarely tell that a stock is melting investors' hearts until after it's made that upward leap.
Taking the market's temperature
But Motley Fool CAPS' proprietary ratings, aggregated from the opinions and accuracy of 160,000-plus members, offer a great way to monitor investor sentiment. Following a CAPS rating trend can help us determine the best time to invest. Let's look at previously rated one- or two-star companies that have recently enjoyed a bump in investor confidence and see whether they're truly heating up -- or headed back to the deep freeze.
|
Company
|
CAPS Rating
(out of 5)
|
Recent Price
|
EPS Estimates
(This Year-Next Year)
|
|
Advanced Battery Technologies (Nasdaq: ABAT )
|
***
|
$3.09
|
$0.38-NA
|
|
Books-A-Million (Nasdaq: BAMM )
|
***
|
$6.65
|
NA-NA
|
|
Lear (NYSE: LEA )
|
***
|
$74.07
|
$3.03-$6.33
|
Source: Motley Fool CAPS; NA = not available.
Obviously, this is not a list of stocks to buy -- just a starting point for further research. Yet if some of the best investing minds are taking notice of these stocks, maybe we should too.
Caution: Contents may be hot
Is there an electric scooter in your future? Probably not, if you live in the United States, but Advanced Battery Technologies, a maker of lithium-ion batteries as well as scooters, has been racking up sales of its bicycles, obtaining more than $3 million in orders of the past couple of months. The segment is new for ABT, having purchased the bike maker Wuxi Angell last year, but already revenues from the venture are approaching 33% of its total.
Powering electric vehicles, rather than producing them, has been what most investors associate Advanced Battery with, comparing it to A123 Systems (Nasdaq: AONE ) . With its move into vehicle production, however, and the rapid growth it's experiencing, investors may have to rethink how they view this growing company.
Highly rated CAPS All-Star bg11235 finds Advanced Battery's cash flow to be a concern, but not one so great that the rewards don't still outweigh the risks: "Cash flow position is much weaker than [net income] would indicate, but still sufficient upside to take a swing at a reasonable relative entry."
Read on
Maybe Books-A-Million is trying to fashion itself as the Ben & Jerry's-style Barnes & Noble (NYSE: BKS ) , buying part of a yogurt company perhaps with an eye on installing a stand in each of its bookstores. It's a curious diversion when e-readers from Barnes & Noble and Amazon.com threaten its core bookselling business.
Forays into music and movies did nothing to help Borders Group (NYSE: BGP ) , which is facing difficult financial straits, and a beleaguered industry contending with dramatic changes in how consumers read isn't necessarily a time to branch out so far.
But Books-A-Million remains under the radar of most investors and Wall Street. Just over 100 CAPS members have rated the company and no analysts cover the bookseller. Now that's oftentimes a prescription for making a winning investment, so head over to the Books-a-Million CAPS page and let us know if this will become a real page-turner. Or not.
Driving home an opportunity
The global recovery in the auto industry had some investing legends willing to hitch a ride with auto parts maker Lear, which emerged from bankruptcy last winter, apparently at just the right time. Revenues rose 36% from the year-ago period on improving conditions here in the U.S. and in Europe. It's looking toward better times in Brazil and China, too.
Although less than a dozen All-Star CAPS members have rated the auto parts maker since it broke free of the bonds of bankruptcy in November, they're unanimous in their opinion that it will go on to beat the broad market averages.
There's good reason for that optimism. Magna International (NYSE: MGA ) also reported better than expected earnings, and noted that North American vehicle production had increased 67% while Europe was up 33%. Lear was a little cautious about Europe's ability to maintain its progress (perhaps rightly so in the aftermath of the meltdown Greece is causing), but there remains some pent-up demand for cars that will benefit the parts suppliers
Checking the mercury
Are these stocks invitingly warm or bitterly frosty? It pays to start your 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. Then weigh in with your own thoughts on which stocks you think are hot little numbers, and which offer cold comfort. It's free to sign up.
RSS Headlines
Fool UK