Wall Street's Best Hidden Stocks

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 Street Picks

5-Year EPS Growth

Syntroleum (Nasdaq: SYNM  )

**

3

NA

Tesla Motors (Nasdaq: TSLA  )

*

2

20%

Zion Oil & Gas (NYSE: ZN  )

*

0

NA

Source: Yahoo! Finance; NA = not available.

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. 

As biodiesel maker Syntroleum's stock has fallen (down by a third year to date), insiders have been picking up blocks of shares on the market. One director in particular has purchased nearly 150,000 shares at prices ranging from $1.60 to $2.00 a share, no doubt expressing confidence in its joint venture with Tyson Foods. While there's some concern about the failure of Congress to reenact a $1.00 per-gallon tax credit for renewable diesel and biodiesel fuels, CAPS member DCMonty25 that government initiatives will ultimately drive the stock higher.

… Government interest. Obama called for greater focus on renewable fuels and "green" technologies, and Syntroleum's process converts animal fats and greases to high-quality diesel and jet fuel. Additionally, the military has shown interest in Syntroleum's jet fuel, given its high-grade and quality. Aside from the fuels, the Dept. of Energy recently awarded Syntroleum a demonstration contract for "phase change" materials, which are used to regulate the temperature of buildings. These materials will also be produced at the Geismar facility, and, if successful, offer a very attractive return.

All charged up
The move toward electric motors in cars has generated a lot of enthusiasm in the auto industry. It's reminiscent of the period in the early part of the last century when there were dozens of carmakers vying for attention.

While Tesla has captured the imagination of many investors, there are several private carmakers including Fisker and Code hoping to gain some market and mind share, and foreign carmakers including Berkshire Hathaway's (NYSE: BRK-A  ) BYD in China are trying to gain traction as well. Both Nissan (Nasdaq: NSANY  ) and General Motors expect their own electric cars to hit the market.

Yet CAPS members remain skeptical, with two-thirds of those rating Tesla expecting it to underperform the market. That could be because while the Leaf, Volt, and Coda are all relatively affordable (once you factor in government subsidies), the Tesla remains an expensive luxury car, which A6EIntruder feels will appeal only to the glitterati

the green car revolution cannot ride on the spaceframe of a two-seater that costs more than $80k. It also will not ride on a four-person car that costs $40k.

The Japanese Import Revolution was borne on fuel-efficient and practical cars like the Toyota Tercel and the Honda CVCC. They didn't cost a mint and lasted. Tesla doesn't fit this bill in any way, shape, or form. 

A utility player
While there's lots of skepticism also built into Zion Oil & Gas because of a biblical belief there is oil in Israel, CAPS member 78TAX offers a more practical assumption: "I think they will hit it big. Oil all around them all four sides."

When you think about it like that, it doesn't seem to require such a willing suspension of disbelief that they will be successful. And there have been brief periods of discovery though they've never amounted to much. Total (NYSE: TOT  ) found oil north of the Sinai Peninsula in the 1980s but the wells subsequently went dry, and Isramco found oil off the coast of Tel Aviv, but never enough to make it profitable. And Noble (NYSE: NE  ) has found a large gas deposit in the Tamar region.

Interestingly, CAPS members think Zion has a better chance of finding oil in the Middle East than Tesla has of making it as a mainstream car company.

You can head over to the Zion Oil & Gas CAPS page and let us know whether it strike it rich in Israel. You can also add the oil and gas exploration company to your My Watchlist page to get all the Foolish news and analysis about this stock aggregated for you.

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.

Berkshire Hathaway is a Motley Fool Inside Value pick and a Motley Fool Stock Advisor recommendation. Total is a Motley Fool Income Investor recommendation. The Fool owns shares of Berkshire Hathaway and Noble. Try any of our Foolish newsletter services free for 30 days.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Motley Fool has a disclosure policy.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.


Read/Post Comments (2) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On September 30, 2010, at 12:43 AM, KidMotley wrote:

    SYMN has 2 caps stars because it's a very questionable investment. Management reports they can't make a profit w/o Government tax grants that haven't been approved. Turning chicken fat into syntheic fuel isn't proven yet and the shorts sure like this symbol. You might want to wait until 2012 to see if this company is still a player. I like it at $1.20 and a couple of days of not falling, which is hard to put together. GLTA

  • Report this Comment On September 30, 2010, at 12:47 AM, goalie37 wrote:

    Great idea for an article, but why did you pick low CAPS rated stocks?

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