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.

Company	CAPS Rating (out of 5)	Recent Price	EPS Estimates (This Year-Next Year)
American Tower (NYSE: AMT  )	***	$45.62	$0.87-$1.04
Analog Devices (NYSE: ADI  )	***	$29.57	$2.19-$2.37
China Automotive Systems (Nasdaq: CAAS  )	***	$17.17	$1.12-$1.29

Source: Motley Fool CAPS.

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 this a harbinger of things to come? Mobile satellite communications service provider LightSquared is looking to build by 2015 a 4G Long-Term Evolution wireless network in the U.S. that will cover 92% of the population. Private equity firm Harbinger Capital is backing the deal, providing $2.9 billion in assets that will make use of a satellite and terrestrial network to be built by Nokia Siemens Network, a joint venture between Nokia (NYSE: NOK  ) and Siemens.

Another winner in this should be American Tower, an owner and operator of 20,000 wireless and broadcast towers in the U.S. (it owns another 7,000 towers in Mexico, Brazil, and India). Leasing antenna space to wireless service providers and broadcast companies accounted for 97% of American Tower's $1.7 billion in revenues in 2009 and with LightSquared's new network needing to deploy 40,000 base stations for its network, look for American Tower and Crown Castle, which owns or operates 24,000 towers to win the lion's share of the business. SBA Communications, owning another 8,300 towers, could see some residual benefit too.

CAPS member IronChef256 says that with wireless carriers committed to upgrading their networks and deploying more equipment, American Tower will reap the rewards:

With the increased use of smart phones and AT&T's announcement that they plan to add 21000 new towers this stock is poised for a strong forward looking performance. This is taking place in a very deep recession if the U.S. can stop losing jobs this will only add more demand for towers. Couple that with the expectation that the iPhone will soon be on other carriers creates a very positive future for AMT

Immune to loss
Analog and DSP integrated circuits supplier Analog Devices has been getting short shrift lately as Texas Instruments (NYSE: TXN  ) reportedly cut into market share from both it and National Semiconductor (NYSE: NSM  ) . Maybe, but Analog Devices reported one of its best quarters ever in May that saw sales, earnings, and margins all widen. Guidance for the year was also expanded beyond expectations.

The CAPS community anticipates ADI roaring loudly in the future as 91% of the members rating the chipmaker believe it will outperform the broad market averages, but why not chip in with your own opinion on the Analog Devices CAPS page?

Tomorrow's big rig
China Automotive Systems is another stock set to explode as demand for cars in China surges higher. It just won a contract from Changan Automobile, one of the country's top five carmakers selling approximately 1.4 million cars last year, to supply power steering units for its vehicles.

bizcbug7 recently said China Automotive would be the supplier of choice for China's carmakers, and 89% of CAPS members weighing in on the auto parts supplier apparently agree. If China's going to be carrying the weight for the world's automakers -- GM says sales soared 48% there so far this year, making it the first time ever it sold more cars there than here in the U.S. -- look to CAS and SORL Auto Parts (Nasdaq: SORL  ) to be among the winners.

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.