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 St. 
Picks

Est. EPS Growth
Next Year

AgFeed Industries (Nasdaq: FEED  )

*****

2

209%

Tata Motors (NYSE: TTM  )

*****

2

15%

Telestone Technologies (Nasdaq: TSTC  )

****

1

0%

Source: Yahoo! Finance; 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
The extreme flooding hitting California right now might make it easier to understand how a similar occurrence in China earlier this year devastated agricultural stocks like AgFeed Industries and China Green Agritech (NYSE: CGA  ) .

Despite huge pork demand in China, AgFeed has found it's difficult to make a profitable go of it and wrote down large swaths of the value associated with the 31 farms it acquired several years ago. The sales increases it saw this past quarter were a result of the purchase of U.S.-based pork processor M2P2, which it is counting on as the basis for future growth. AgFeed previously saw saw receivables get away from it as it extended terms to customers, but was forced to curtail the practice.

Management changes were subsequently made to shake up the company, and CAPS member lef39 hops the higher prices typically associated with the winter season are enough to cause AgFeed to change direction. With the stock down 50% in 2010, the market isn't assigning its forecasted earnings much of a value.

Whether it can turn itself around by expanding internationally only you can decide. Add AgFeed to your watchlist and have all the Foolish news and analysis aggregated for you in a single place.

Still revved up?
Tata Motors got caught between the hammer and the anvil last month. Sales of its super-cheap, super-small Nano slid 85% in November, just as raw materials prices soared causing it to have to raise prices. And it couldn't happen at a worse time, as the company has gotten caught up in reports of spontaneous fires that engulfs the cars.

The carmaker is extending new financing arrangements and bulking up safety measures. It's going to need to repair those flats first if it wants to export Nanos to Europe and the U.S. The last thing it needs is to conjure up are images of Pintos exploding during a rear-end collision. Daimler's (NYSE: DAI  ) Smart car also looks like it would come out on the losing end of any car-crash mash up, but crash-safety videos show surprisingly strong protections for its occupants.

Now I've wondered before whether Nano could gain the same traction here, considering Ford (NYSE: F  ) has been firing on all cylinders. A mix of styling, features, and price -- and not being on the government dole -- have all helped fuel Ford's resurgence. But CAPS All-Star Seansonfire thinks Tata can benefit from the same factors that boosted the U.S. after World War II.

The country of India will go through essentially what the U.S. went through after WWII in the way of the creation of a national highway system, the number of cars sold in India over the next 5 years should increase significantly (planned completion in 2015 of highway system). This will benefit Tata Motors top line and bottom line, as its Indian business is where all of its profit is generated at about 10% profit margin.

Let us know on the Tata Motors CAPS page whether it will get itself out of the ditch it's seemingly run into.

A utility player
No doubt, Telestone Technologies' decision to dilute shareholders with a 1.67 million share offering didn't sit well with them. Yet they're also ignoring the long-term growth prospects the Chinese communications company has through its relationships with China Mobile (NYSE: CHL  ) , China Telecom, and China Unicom. While equipment sales jumped 58% year over year, sales in professional services -- which help the phone companies build networks on the country's current 3G technology -- more than tripled.

Yet investors are right to be cautious about the telecom's moves, and some CAPS members warned about the potential for dilution early on, but CAPS member bizcbug7 thinks investors need to be cautious in general about investing in these small cap Chinese stocks: Growth potential....Greatest risk is financial controls and reporting. Generally, I avoid China stocks with no-name CPA firms....and this may be one."

Still he's rated it to outperform the market, but you can give us your take on the Telestone Technologies CAPS page on whether investors should disconnect from this company.

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.

Ford is a Motley Fool Stock Advisor recommendation. China Green Agriculture and China Mobile are Motley Fool Global Gains choices. The Fool owns shares of China Green Agriculture and China Mobile. 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.


Read/Post Comments (2) | Recommend This Article (15)

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 December 27, 2010, at 2:56 PM, Medicalrecordman wrote:

    TSTC lied to shareholders by stating they wouldn't have to dilute with their new line of credit and shortly thereafter they diluted. This stock is only good for a quick bounce and nothing else. The company can't be trusted from here on out. They're flat broke and no one will pay them, thus the monsterous A/R's. I don't think shorts have alot to be fearful about at the moment. Things may change in another quarter, but as a trader, who the heck wants to wait around while holding the bag ?

  • Report this Comment On December 28, 2010, at 12:35 AM, honestinvestor wrote:

    TSTC made huge mistake by diluting share when they had 44 million credit line. The investors paid the price. I totally agree with above comment. They should come up new contract for share to jump up. the management did not care about investors. it's really sad.

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