Analysts Are Completely Wrong About These Stocks

Although there will always be differences of opinion, these are some of the CAPS community's most favored companies. So why does the professional analyst community look down on them?

Below we'll look closer at a handful of companies that CAPS members have bestowed the highest four- and five-star rating upon, meaning you think they have the best chance of outperforming the market. Yet Wall Street still can't muster up enough opinions to agree.

So who's got it right? The professional class of analysts, sitting in their paneled offices smoking stogies, or a motley crew of community investors pooling their best thoughts for others to share. We've got an idea on who we think will come out ahead, how about you?

Stock

CAPS Rating
(out of 5)

Wall Street Bullish Sentiment

Buckeye Partners (NYSE: BPL  )

****

0%

Elan (NYSE: ELN  )

****

50%

Marchex (Nasdaq: MCHX  )

*****

33%

Source: Motley Fool CAPS.

Now as much as we love our CAPS community, don't invest in these companies just because they've garnered top honors. And don't sell just because Wall Street looks down on them either. Investing requires closer diligence on your part, so use these ratings as a launching pad for your own research.

A ray of hope
With the merger of Buckeye Partners and Buckeye GP Holdings completed, investors can expect to see the refined petroleum limited partnership reduce its cost of capital while enabling it to accelerate growth in its distributable cash flows. Like ONEOK Partners, which owns the natural gas market and distributor Oneok (NYSE: OKS  ) , the Buckeye general partnership owned its own publicly traded midstream energy LP, and was cashing in 45% of incremental payouts from incentive distribution rights it received.

Now that it's consolidated into one entity, Buckeye can concentrate more fully on its pipeline business, which has been growing dramatically, while working on improving the natural gas storage side. It was the only area that declined last quarter.

The opportunity for growth seems great, and 92% of the CAPS members rating the pipeline specialist believe it will outperform the broad market averages. Transport your thoughts to the Buckeye Partners CAPS page on whether you think this company will be able to market itself better.

Ride that pony
Without question the multiple sclerosis market is crowded, with Novartis (NYSE: NVS  ) , Teva Pharmaceuticals (Nasdaq: TEVA  ) , Biogen Idec, and Elan vying for doctor and patient attention. There are plenty of others as well with varying treatments, but Merck KGaA suffered a setback as the FDA pushed back by three months its review of cladribine, a relapse-remitting MS therapy that the agency's advisory panel voted against approving because of safety concerns.

I won't even begin to try and suggest which treatment may be superior, but my Foolish colleague Anders Bylund is able to offer a personal perspective on Teva's Copaxone at least. Still Elan was able to record a near 13% increase in revenues for Tysabri as higher demand and higher prices fueled the rise.

Many CAPS members blame Elan's management for the stumbles its endured, and this past summer mewag50 suggested the stock would be trading hands at twice the level it currently is had it not been for the ineptitude. Fortunately for Elan, it still has the science behind it.

If not for poor management and many blunders by them, ELN would easily be well over $10 based on its science and pipeline, as well as Tysabri, which is well over $1 bil. and still has great growth potential.

Only you can decide if it is right to inject Elan into your portfolio, so add it to your watchlist and have all the Foolish news and analysis aggregated for you in a single place.

Construct an argument for growth
When this whole Internet thing started, not many people realized what it would mean to have a popular domain name that could drive eyeballs -- let alone dollars -- to your site. But "not many" doesn't mean "no one," and a few smart people bought up seemingly generic domain names: business.com, news.com, even sex.com.

Today, owning domain names is big business, since they can go for thousands and sometimes millions of dollars. For example, Amazon.com  (Nasdaq: AMZN  )  paid a princely sum to the owners of Quidsi, which had the wherewithal to own both Diapers.com and Soap.com.

So if Marchex is already in your portfolio, you just might want to hang onto it, as it owns thousands upon thousands of domain names. Following the going-private deal for Internet Brands, Marchex might be able to drum up a following too.

The CAPS community is certainly leading the way, with 87% of those rating the domain hog to outperform the broad market averages. You can click on over to the Marchex CAPS page and let us know what you think a domain name is worth, let alone tens of thousands of them.

What's wrong with that?
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 tell us which side of the street will be the ultimate winner.

Elan is a Motley Fool Rule Breakers choice. Amazon.com is a Motley Fool Stock Advisor selection. Novartis AG is a Motley Fool Global Gains recommendation. Oneok and ONEOK Partners are Motley Fool Income Investor picks. The Fool owns shares of Teva Pharmaceutical Industries. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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.


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