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 little analyst coverage, and 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. 

Source: Yahoo! Finance and Motley Fool CAPS. 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. 

Hiding in plain sight
Investors in BSD Medical are nothing if not protective and passionate about the maker of hyperthermia cancer treatment devices. They lit into me in October when I suggested BSD used its press release machine to boost the stock so as to dilute shareholders. In fact, they've had several secondary offerings this year, issuing shares in February, May, August, and most recently in November when it issued another 1.75 million shares at around $6 a share, about 25% below where its shares were trading. The stock has fallen 45% in less than a month.

For the fourth quarter, BSD said it sold only one unit (but none of its new MTX-180 systems), though it said after the end of the fiscal year it had received orders for seven units worth some $2.4 million. They admit cancer-treating doctors have given hyperthermia treatment short shrift and reimbursement from insurers has been inadequate, making penetration difficult.

Like Intuitive Surgical (Nasdaq: ISRG) or Accuray (Nasdaq: ARAY), whose sales of their innovative surgical tools were hurt because of cutbacks in capital expenditure spending at hospitals, BSD Medical's potential customers have faced difficulty in arranging financing to purchase its devices.

While hyperthermia treatment and BSD's equipment may have more potential than I originally gave it credit for, its stock price still doesn't justify an investment here. It trades at more than 70 times its scant sales, and operating losses have steadily mounted.

Yet 95% of those CAPS members rating BSD Medical believe it will still outperform the broad market averages. If you're unsure whether the hyperthermia device maker is hot enough for your portfolio, add it to your watchlist and have all the Foolish news and analysis aggregated for you in a single place.

All charged up
Without sufficient supplies to meet demand, analysts expect the price of copper to surge as high as $5 a pound over the next few years. Although China is exerting effort to contain inflation and too-hot growth in the economy, infrastructure projects require a lot of the metal and should continue to exert upward pressure on the price.

That trend should help the world's largest copper miners like Freeport-McMoRan (NYSE: FCX) and Southern Copper (NYSE: SCCO), but also smaller companies like Lihua International, a Chinese manufacturer of copper wire products made from recycled materials. While that has given it a price advantage over competitors who make wire from pure copper, if prices do rise, it will ultimately affect its costs, too.

Highly rated CAPS All-Star FleaBagger says Lihua's ability to generate quality cash flows makes it a top stock for an investor's portfolio.

Another good sign is how closely the free cash flow, subtracting out cash from stock sales, matches reported earnings pretty closely. They make cash, they report it as earnings. That's pretty much the way it's supposed to go. Throw in the 45-50% growth and PEV (price to enterprise value) of about 6.5, and you have what I believe to be an All Star stock.

Let us know on the Lihua International CAPS page whether the copper producer will continue to turn up like a lucky penny.

A utility player
Geothermal energy uses Earth's natural heat to generate electricity, and while geothermal plants have higher initial building costs than fossil fuel plants do, they have lower long-term costs. A bill recently introduced in Congress would give geothermal producers like U.S. Geothermal the ability to expand their operations on an adjacent property without competitive bidding if they've already successfully produced a project.

With solar energy and wind power dominating the headlines, CAPS member WallytheWalrus figures the geothermal industry has been pretty much left wide open for exploration.

Very long term play on what could be a lucrative and pretty much wide open industry. The margins on geothermally generated energy seems like they could be stunning. The US government appears serious on backing alternative energy sources and these guys seem well poised to take advantage of that.

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.