When asked for the secret of his success, baseball player Wee Willie Keeler replied, "Hit 'em where they ain't." What worked for Willie at the plate applies equally well in investing.
Seeking stocks that others ignore, shun, or simply forget gives individual investors like you an edge over the professionals. When Wall Street turns a blind eye, you have a chance to get in before these stocks get discovered -- or rediscovered -- and start taking off.
Below, we'll check out companies with only a handful of analysts covering them, then pair our list with the opinions of the Motley Fool CAPS community. A stock that garners CAPS' top ratings, but hasn't yet caught analysts' attention, could be your next home run investment.
|
Stock
|
CAPS Rating
(out of 5)
|
Wall Street Picks
|
5-Year EPS Growth
|
|
Aluminum Corp. of China (NYSE: ACH )
|
*****
|
4
|
NA
|
|
American Physicians Service Group (Nasdaq: AMPH )
|
*****
|
3
|
8%
|
|
LaCrosse Footwear (Nasdaq: BOOT )
|
*****
|
2
|
18%
|
Source: Yahoo! Finance. NA = not available. EPS = earnings per share.
Remember, without analyst support, you'll have to do your own scouting to see whether these stocks deserve a spot on your portfolio's roster. Don't buy or sell them based solely on their appearance here.
A utility player
Worries that China may increase efforts to put the brakes on a heated economy to prevent asset bubbles from forming are having a deleterious effect on industrial sectors across the country. While real estate companies like E-House (NYSE: EJ ) would bear the brunt of any immediate quashing of the housing industry's growth prospects -- the threat of a property tax has already sent shudders through the market -- mining and manufacturing industries would also get licked by the whip. Aluminum giant Alcoa (NYSE: AA ) sank on fears of a cutback in demand and Aluminum Corp. of China has taken a hit as well.
While that might raise immediate worries about growth, there is still pent-up demand to modernize China, and CAPS member chundarr says it's more appropriate to have a long-term outlook when considering an investment in Aluminum Corp. of China:
China will be the dominant physical economy in the next decade... (if it isn't already). Their hunger for raw materials will not be slaked.
Doctor, heal thyself
Providing liability insurance and financial services to doctors shouldn't be a liability itself, but the vagaries of the medical-professional liability insurance market are putting pressure on American Physicians Service Group. Reform will probably end up happening state by state, and that might not help American Physicians fast enough. States might also enact changes that don't benefit American Physicians. For instance, the company primarily serves the medical profession in Texas -- although it's expanding into Arkansas and Oklahoma -- where tort reform has brought in more competition, which is pressuring pricing.
American Physicians also finds itself going up against industry heavyweights including Medical Protective Insurance Services, a subsidiary of Berkshire Hathaway (NYSE: BRK-A ) , and ProAssurance (NYSE: PRA ) .
It's those competitive pressures that has CAPS member davaidesign believing American Physicians will likely underperform the market: "Too much competition and insignificant growth will keep this one lagging."
Kicking it higher
LaCrosse Footwear is enjoying significant growth opportunities as it sells its footwear to the government, which accounts for more than three-quarters of its revenues. Total sales last quarter jumped 32% on a 38% increase in that segment's revenues, generating a profit of $0.25 a share, compared to an $0.11 loss the previous year.
The stock has more than doubled over the past year, but with such a concentration in its customers, investors would be wise to use caution, even if analysts are predicting some heady growth.
CAPS member ultraanalyst thinks the footwear specialist has a firm enough financial foundation that there is still plenty of room for further price appreciation:
Excellent financial statements - Income, Balance, and cash flow. Their products are quality but still wear out and must be replaced. That's great. They consistently turn a profit, are growing, and their price has been going higher.
Swing for the fences
When seeking investments where no one else is looking, Motley Fool CAPS is the best place to start your own research. 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.
Sign up today for the completely free service, and tell us whether these hidden stock opportunities will help us go one up on Wall Street.
RSS Headlines
Fool UK