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.
(out of 5)
Wall St. Picks
|Dynavax Technologies (Nasdaq: DVAX )
|Internap Network Services (Nasdaq: INAP )
|Stillwater Mining (NYSE: SWC )
Sources: Yahoo! Finance and Motley Fool CAPS.
Remember, without much 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 buy or sell them based solely on their appearance here.
Hiding in plain sight
With its lead hepatitis B vaccine, Heplisav, filling up its phase 3 enrollment quota, Dynavax Technologies is ready to build on the positive early data showing the drug is an improvement over GlaxoSmithKline's Engerix-B. Dynavax is looking to develop a treatment that works faster and provides greater protection with fewer doses.
Roche and Merck (NYSE: MRK ) market the two leading brands of hepatitis therapy, but with a market that large and growing, its understandable there are many biopharmaceuticals that want to get in. SciClone Pharmaceuticals' hep B treatment, Zadaxin, is approved for sale in China and in a number of European countries right now, but most of the hepatitis cases being diagnosed are in underdeveloped and emerging economies.
With the encouraging results Dynavax has reported thus far, 94% of the CAPS members rating the biopharma think it will outperform the broad market averages. You can add Dynavax Technologies to your watchlist and have all the Foolish news and analysis aggregated for you in a single place.
Still revved up?
Although Akamai (Nasdaq: AKAM ) handles about 20% of all Internet traffic, there's been no shortage of competition from Level 3 Communications (Nasdaq: LVLT ) , which recently coaxed Netflix to leave Akamai, and Internap Network Services. Despite a somewhat disappointing third quarter that saw it post a penny-per-share loss, Internap has also been successful in signing up new customers, which has led some analysts to upgrade their expectations for the datacenter operator and Internet traffic router.
Another crowded arena it's delving into is public cloud storage with its deployment of XipCloud, an open-source, cloud-computing platform based on Rackspace's (NYSE: RAX ) OpenStack storage software. It represents the first major deployment of the software, which was jointly developed by Rackspace and NASA (so this stuff is rocket science!).
CAPS member sudsman1 says Internap has finally matured enough fundamentally to warrant an investment, a sentiment no doubt echoed by almost all the All-Star members rating the Internet specialist. Only one has suggested Internap will underperform the markets.
Let us know on the Internap Network Services CAPS page whether this move into cloud storage represents a prosperous road for it to travel on.
Evidence of a turnaround
Before rare-earth minerals turned investors into mindless lemmings, precious-metals group miner Stillwater Mining was an investor favorite because it was the only U.S. producer of palladium and the largest producer of platinum metals outside of South Africa and Russia.
A recovering auto market in the U.S. and a surging one in China, where sales are expected to grow an additional 10% to 15% in 2011 (after rising 32% last year), are leading market analysts to expect palladium prices to soar 24% this year, perhaps rising as high as $1,000 an ounce. Because the auto market is the primary user of palladium, others say it could hit $1,200 by 2013.
CAPS member alzbeta figures Stillwater Mining has the perfect business model to capitalize on continued growing demand:
This is a profitable American company that mines palladium and platinum in Montana and also recovers these same metals from used catalytic converters. Since they are both mining and recycling these strategic metals, they should do well going forward
Mine the Stillwater Mining CAPS page for additional nuggets of insight into this miner's future.
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.
Editor's note: A previous version of this article incorrectly stated the number of new hepatitis cases diagnosed each year. The Fool regrets the error.