These Cold Stocks Are Heating Up

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 165,000-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.

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
The market might not appreciate the results Celldex Therapeutics has achieved with partner Pfizer (NYSE: PFE) for its drug candidate CDX-110, but the CAPS community is climbing aboard, raising its rating to three stars even as the market sells off the shares.

What might get more appreciation is another therapy, CDX-011, which is an advanced skin cancer treatment, and in midstage clinical trials, it met the study's goals. It prompted a 15% response rate in a 34-patient study, which Celldex says is worthy of further research. If it ultimately makes it to market, CDX-011 will likely square off against ipilimumab, a treatment being developed by Bristol-Myers Squibb (NYSE: BMY), which it says prompted a 24% survival rate in patients.

With more than $42 million in cash, CAPS member CVJN2007 says it has the resources on hand to go further:

Way undervalued with late stage products, as well as alot of cash to hold them without turning to market for $$0. ASCO results were good and Pfizer deal is going forward...whats not to like with this company? 

A real stem-winder
Seems strange that with eBay reporting fairly decent earnings last quarter, the stock reacted so negatively. Revenues were up 18% excluding Skype, and PayPal saw a 35% surge in total payment volume. Solid. So what gives?

The problem no doubt stems from the clash the online auctioneer continues to have with its sellers. Read any comment section of an eBay article and you'll find the people who are the heart of the site railing against the treatment they receive. This was supposed to have been addressed some time ago, and while there can always be a few malcontents, the perniciousness of the commentary suggests eBay hasn't cured the disease.

Now with Visa (NYSE: V) coming in to try and steal a slice of the online payment market with its purchase of CyberSource (Nasdaq: CYBS), will it spell a further decline in results? CAPS member MainStreetMayor thinks the bells ringing over weak guidance are just a false alarm:

I see nothing fundamentally wrong with eBay's business model and it's hard to see a better value on the Internet right now. eBay has a market cap of $32 billion, $4.5 billion in cash and no debt. Price/Earnings of about 12 is also very low for this sector. 

eBay has not only the most popular online auction site but a growing store to rival Amazon. Paypal is also the de-facto payment system for online purchases.

Not so threadbare
You know when you have to wade through half an earnings release to find out how revenues and profits were in a quarter, the company is trying to bury bad news. Ivanhoe Energy waited till the eighth bullet point in its first-quarter release to finally say that revenues fell 7% from the year-ago period. It's also still producing losses, though they narrowed considerably. They were expected to rebound by this time, as oil prices had risen dramatically, but its interest in Chinese production was halved, and it weighed on results.

CAPS All-Star GREYGOLD is unconcerned, thinking its exclusive HTL technology will eventually provide a gusher of profits:

With this company the sky could be the limit. Lets look at the facts. First this company has developed an exclusive technology called HTL. This technology is able to upgrade heavy oil, like the kind found in tar sands, into more valuable lighter oil and do it cheaper and faster than ever before. So what does this mean? It means while other companies are struggling to squeeze a profit from heavy, less valuable oil, this company has the ability to transform this oil into more expensive, easier to market oil up to 20,000 bpd. This also gives the company the chance to produce additional revenue from leasing their technology to other oil companies. 

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.

Editor's note: An earlier version of this article mistakenly identified CDX-011 as CDX-110. The Fool regrets this error.