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 analyst coverage, 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 St. Picks
|
5-Yr. EPS Growth
|
|
American Movil (Nasdaq: AMOV )
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*****
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0
|
N/A
|
|
AXT (Nasdaq: AXTI )
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***
|
3
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28%
|
|
United States Natural Gas (NYSE: UNG )
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***
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5
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N/A
|
Source: Yahoo! Finance.
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 just buy or sell them based solely on their appearance here.
The semiconductor substrate producer AXT is taking advantage of the current tech boom and the resulting increased demand for its materials. With a resurgence in solar stocks fueling shares' rise, it's unlikely that this stock will remain hidden much longer. However, Intel's (Nasdaq: INTC ) warning about softer PC sales last week may cause the tech rally to sputter.
The market's hardly unaware of the United States Natural Gas exchange traded fund, which attempts to reflect the changes in percentage terms of the price of natural gas. Investors ought to watch this fund, as the market tries to read how inventories will react to demand. Last week, the Energy Department reported that supplies remain in the upper reaches of the five-year average.
A utility player
When investors think about America Movil's (NYSE: AMX ) stock, they're usually envisioning the NYSE-traded class L shares of Mexico's largest wireless telecom operator, not its Nasdaq-traded A shares. America Movil resulted from spinoff from Telefonos de Mexico (NYSE: TMX ) back in 2001, and the different share classes represent those in effect at Telmex at the time of the spinoff.
Since the two classes move in lockstep to each other, you might think there's little reason to opt for one over the other. However, the primary difference between the two classes -- there's actually a third AA class that doesn't trade -- is that the L class shares receive a preferred annual dividend, while the class A (and AA) shares have full voting rights. The L class is also a more liquid stock, which helps explain why its shares are more widely known.
Carlos Slim, chairman of America Movil (and Telmex), passed Bill Gates and Warren Buffett as the world's richest man this year, with a net worth of around $60 billion. But his stranglehold on the Mexican telecom market faces increased competition. Grupo Televisa and a NII Holdings subsidiary won a national wireless license at auction, though criticism of the process abounded. Televisa owns about 70% of the broadcast television market in Mexico. Telefonica (NYSE: TEF ) also won two auctions this year; the race to offer Mexico phone, TV, and data services over wireless and wireline networks is on.
While Carlos Slim isn't guaranteed to get what he wants -- look at his loss of the wireless license to Televisa, despite a bid several orders of magnitude larger -- his larger-than-life presence in the industry allows him to hold commanding sway. He recently received approval to consolidate his wireless and wireline businesses.
Yet the increasing risk of the Mexican market can't be ignored. The country's drug cartels are raising their profile through murder and mayhem, which may make south-of-the-border stocks more volatile. Investors might want to keep an eye on both classes of America Movil stock, and be ready to move in if either gets caught in the crossfire.
Commenting on the Class A shares, CAPS member henriV100 observes: "Typical growth story in emerging markets. Provided that Slim and family keep up what they have been doing previously."
Almost 1,800 CAPS members have weighed in on the larger Class L shares, while less than 100 have dialed up their opinion on the Nasdaq-traded tranche. In both instances, though, CAPS investors think the Mexican telecom giant offers outstanding opportunities to generate market-beating performance. Connect with other members on the America Movil CAPS page and let us know whether Carlos Slim can still offer investors fat profits.
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.
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