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 analysts covering them, 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.
Wall St. Picks
Est. EPS Growth Next Year
|BioSante Pharmaceuticals (Nasdaq: BPAX )||****||1||28%|
|National Presto (NYSE: NPK )||*****||0||11%|
|Sunesis Pharmaceuticals (Nasdaq: SNSS )||*****||3||35%|
Source: Yahoo! Finance; Motley Fool CAPS; NA = not available.
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
As it waits for trials to conclude on its "female Viagra" topical cream LibiGel, BioSante Pharmaceuticals continues clinical trials on its melanoma cancer vaccine. The FDA just conferred orphan-drug status on the therapy, which means it joins BioSante's vaccines to treat pancreatic cancer, acute myeloid leukemia, and chronic myeloid leukemia in receiving the designation that uses financial incentives to encourage drugmakers to develop therapies for diseases affecting small numbers of people.
There are still many years ahead for the cancer therapy, which is why many investors focus on LibiGel. It's in phase 3 trials now and could have the market all to itself if approved, since the FDA shot down Procter & Gamble's (NYSE: PG ) testosterone patch several years ago and Boehringer Ingelheim dropped flibanserin because more study was needed to validate its safety and efficacy.
CAPS member NickBo9 elaborates:
Nearing the end of Phase III trials which seem to be successful in proving that new drug Libigel is safe. There is a large market for this drug as there are currently no FDA approved treatments for female sexual dysfunction. Stock price should climb in anticipation for NDA and FDA approval.
You can add BioSante Pharmaceuticals to your watchlist and have all the Foolish news and analysis aggregated for you in a single place.
Similarly, Sunesis Pharmaceuticals could enjoy significant competitive advantages if its experimental leukemia drug, vosaroxin, gets approved. There are few treatments available for acute myeloid leukemia and competitor Seattle Genetics (Nasdaq: SGEN ) suffered a failure of its own therapy, lintuzumab. It's fortunate, however, to have a fairly good pipeline of prospects to keep moving forward, as does Sunesis, which has a collaborative agreement in place with Biogen Idec (Nasdaq: BIIB ) .
On CAPS, 83% of the members rating the pharmaceutical marked it to outperform the market. Mine the Sunesis Pharmaceuticals CAPS page for additional nuggets of insight into this drugmaker's future.
If you thought the business of popcorn poppers, salad-making gadgets, and pizza ovens was boring, you wouldn't be disabused of that notion by reading the financial reports of National Presto, the leading kitchen gadget maker. Last quarter, sales of its small appliances rose 3% as a result of increased unit shipments. And that's about all it had to say about that. Way to excite your base, National Presto. You can hit the snooze button now.
What investors might be surprised to learn, though, is that adult diapers is a growing business for National Presto, as its absorbent-products segment manufactures private label diapers, and reported revenues grew 7% to $20.1 million in the third quarter. Kimberly-Clark (NYSE: KMB ) , which has the better-known name in its Depend brand, also saw significant growth last quarter, with double-digit volume increases. Both companies saw segment profits hit by rising commodity prices. Kimberly-Clark's profits fell 8% on a 20% rise in input costs while National Presto's profits were sliced in half.
CAPS member jahjimhall likes another surprising National Presto segment: its ordnance products sold to the military. All but one of the CAPS All-Stars rating the company see it outperforming the market. Let us know on the National Presto CAPS page what you think about the stock's prospects.
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.