Some companies are obviously great investments -- in hindsight. Yet for every stock out there screaming "buy me," others simply give us a nudge and a nod. How can we tell tomorrow's obviously great investments from the thousands of pretenders?
The stars' walk of fame
On Motley Fool CAPS, these opportunities can be found among our four-star stocks. In CAPS' proprietary ratings system, they rank higher than most of the other 5,400 stocks tracked, but they're just shy of superstardom. While all the attention might be focused on their five-star peers, we can sift through CAPS to find four-star companies that might be approaching greatness. Here is a handful.
-
OmniVision Technologies
(Nasdaq: OVTI) -
Progress Energy
(NYSE: PGN) -
RF Micro Devices
(Nasdaq: RFMD) -
Telestone Technologies
(Nasdaq: TSTC) -
XenoPort
(Nasdaq: XNPT)
Some of these names might surprise you. For example, utility Progress Energy is living up to its name by developing alternative energy while beating earnings estimates and raising guidance for the year. Almost great? Even familiar names can still offer some of the best opportunities. Perhaps we've just forgotten the potential they still hold.
And OmniVision Technologies is once again the subject of rumors; if true, it could cement its position as an image sensor leader. Last year, it was rumored that OmniVision's chips were going to show up in Apple iPhones; now it's the Motorola
In the sight of greatness?
Best known as a chip maker powering the rise of the mobile Internet, RF Micro Devices is targeting industry giants like Samsung and Research In Motion in a bid to add to the very large contribution Nokia makes, all of which is dialing up greater revenues.
Rival Skyworks Solutions has enjoyed a modicum of success, too, by having its chips included as part of Apple's lineup. What the improving results of both show is that the mobile Internet remains the force to contend with. CAPS member musicalbob says the industry is going to have to contend with RF Micro Devices hitting on all cylinders: "Co. tries to stay on the leading edge, takes risk and hits it right a lot."
Add your opinion on which chip maker comes out ahead on the RF Micro Devices CAPS page.
On the shoulders of giants
Chinese wireless network solutions provider Telestone Technologies is benefiting from increasing demand from the country's big three mobile telecoms, China Mobile, China Telecom, and China Unicom. Each carrier added at least 1 million new 3G users to their networks, with China Telecom adding more than 3 million customers to its mobile user base.
Investors were eyeballing Telestone earlier this year precisely because of growth in the Chinese telecom market. CAPS member vinney11 says that considering its prospects for growth, there's no way it should be trading where it is.
Beaten down but shouldn't be. This is a sound business with huge customers in China Telecom. Very small and is likely to grow fast.
A big opportunity
Remember those old Batman TV shows when the Caped Crusader punched out a villain? Pow! Well, that's how XenoPort is undoubtedly feeling after the migraine headache therapy it's developing with GlaxoSmithKline failed to meet study goals last month. Bop! That came after the FDA shot down its restless leg syndrome treatment Horizant earlier this year. Bam!
Still, top-rated CAPS All-Star and biotech guru zzlangerhans said after the Horizant decision that there was still a good chance for a comeback.
The upshot of all this is that Xenoport has a strong chance for a comeback against this FDA concern, and will receive quite a lot of support here. Whether or not they are eventually successful, the magnitude of the destruction indicates a strong likelihood of rebound to at least the 12 level within the next few months. As a back-up plan, the company has several other prodrugs in early development and sufficient funds to progress them into late stage trials, although there is nothing tremendously exciting at this point.
Read his full analysis here, and then head over to the XenoPort CAPS page and let us know what you think.
A great opportunity for you
Investor sentiment suggests these four-star investments still seem to be on their way to five-star greatness, but it pays to start your own 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.
Sign up today for the completely free service and let us hear what you have to say about the great and almost-great companies that interest you.
