With all the volatility in the markets today, there's no shortage of market seers attempting to call a bottom. Man of the Year Ben Bernanke called a bottom not once, but twice. Heck, even Keanu Reeves laid out what a world-ending market bottom looks like.
Investors should consider buying stocks after a big decline, when pessimism has unduly beaten good companies down to great prices. That's why we here at the Fool -- and 160,000-plus investors like us -- look to the Motley Fool CAPS community to help sort the real opportunities from languishing companies driven by speculation.
A real bottom or another leg down?
Of course, there's no foolproof method for timing a market bottom. But CAPS has a great balance of both quantitative and qualitative resources available on 5,400 stocks, and even a nifty stock screening tool to help investors quickly zero in on potential investment opportunities.
I've used the CAPS screener to find $100 million-plus companies that have seen their stock prices appreciate by at least 15% in the past 13 weeks even while they remain at least 25% below their 52-week high.
|
Company
|
CAPS Rating
(out of 5)
|
13-Week
Price Change
|
% Below
52-Week High
|
|
Coeur d'Alene Mines (NYSE: CDE )
|
****
|
17.8%
|
31.4%
|
|
Star Scientific (Nasdaq: CIGX )
|
*
|
140.5%
|
69.8%
|
|
Maguire Properties (NYSE: MPG )
|
*
|
109.3%
|
31.7%
|
Source: Motley Fool CAPS.
Results from Feb. 12 through May 10.
Star Scientific's shares have come roaring back recently, but the smoking-alternative company is plagued by continuing operating losses and liquidity issues. Meanwhile, Maguire Properties recently stirred up excitement when it topped first-quarter estimates after giving up about $1 billion in real estate to its lenders in 2009. Yet CAPS members still assign a lot of risk to these one-star stocks.
Members are much more optimistic about the momentum of four-star Coeur d'Alene Mines.
The bottom case
CAPS mining investors have pointed out several reasons why Coeur d'Alene Mines may be looking nowhere but up. Balance sheet improvements and the ramping-up of production at new mines have placed the company in a good position to reap the rewards of rising precious-metals prices. Like peers such as Hecla Mining (NYSE: HL ) , which topped first-quarter expectations, Coeur d'Alene Mines has been relishing higher silver and gold prices, with average realized silver and gold prices during the first quarter 36% and 26% higher than last year's first quarter.
Its Palmarejo mine, which began production last year, has sent gold production soaring and helped the company generate a 94% increase in first-quarter total metal sales. This year's opening of its Kensington mine is expected to drive gold production further.
A general bullish sentiment toward rising demand and prices for silver also has investors in silver exchange-traded fund iShares Silver Trust (NYSE: SLV ) seeing more profits ahead. A recent report by metals research firm CPM Group predicts rising industrial demand for silver this year as the economy recovers, and also sees its safe-haven qualities as a plus during times of record deficit spending.
Or is there more room to fall?
Even though Coeur d'Alene Mines has tailwinds working in its favor, the company has had red ink on the bottom line of its income statement in recent earnings seasons. While peer Silver Wheaton (NYSE: SLW ) managed to turn in solid earnings in 2009, and Pan American Silver (Nasdaq: PAAS ) put up surging first-quarter profits, Coeur d'Alene Mines posted a wider 2009 loss and followed up with another loss in the first quarter.
Some investors are concerned about how much of the sales and production increases in the future will flow to the bottom line, and despite the progress with its mines, some investors are considering other companies in the sector that have less risk and a stronger track record in consistently turning production into profits.
What's your call?
About 95% of the 1,341 CAPS members who have rated Coeur d'Alene Mines are bullish on the stock and see it beating the broader market averages. I agree Coeur d'Alene has a good chance of being a market-beating investment, but I've followed the lead of many other silver investors and placed Silver Wheaton on my CAPS buy list.
But what ultimately counts is your own opinion; CAPS is just there to help you form it. The best part is that the Motley Fool CAPS database is all free, and you can even add your own insight on any of the 5,400 stocks that our 160,000-plus members have covered.
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