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 Street
Picks
|
Est. EPS Growth
Next Year
|
| Hansen Medical (Nasdaq: HNSN ) |
****
|
4
|
29%
|
| KV Pharmaceutical (NYSE: KV-A ) |
****
|
1
|
NA
|
| Precision Drilling Trust (NYSE: PDS ) |
*****
|
4
|
439%
|
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 just buy or sell them based solely on their appearance here.
Hiding in plain sight
In a deal that attracted the notice of CAPS member KimLanners and other investors who sent Hansen Medical's shares soaring 38% last week, Phillips Electronics (NYSE: PHG ) acquired the rights to develop and market Hansen's technology for fiber-optic shape sensing and localization. The deal includes an up-front payment of $29 million, with $78 million more in future payments.
This isn't the first time the two companies have collaborated. They have an agreement in place to integrate Hansen's Sensei robotic catheter system and Phillips' cardiovascular x-ray device. Like Intuitive Surgical's (Nasdaq: ISRG ) daVinci system, the Sensei robotic platform translates the surgeon's hand motions into device movement -- in this case, a catheter inside a patient's heart.
With 95% of CAPS members rating the medical device maker to outperform the broad market averages, they're expecting Hansen to devise even greater growth opportunities. You can shape the opinion over on the Hansen Medical CAPS page and then add the stock to the Fool's free portfolio tracker.
A big U-turn
Only last month, KV Pharmaceutical was in freefall, after the FDA delayed a decision on the drug it's developing with Hologic (Nasdaq: HOLX ) . For the second time, the FDA said it wanted more information on Gestiva, which is designed to reduce the risk of preterm birth. This had some observers questioning whether it would have the liquidity available to wait until a decision was made, since it held up financing it was counting on.
While a ruling was not expected until April, last week the FDA gave KV the go-ahead on the drug, which has been renamed Makena. KV will now get Hologic's assets for the drug; in exchange, it will pay the biotech $12.5 million.
CAPS member ImpetuousFool notes that KV is back in the running now -- a sharp reversal of fortunes for the pharmaceutical, which had previously pled guilty to criminal charges for not disclosing problems with two of its drugs. While the one analyst covering the stock is bearish, CAPS members have been overwhelmingly supportive, with 96% rating it to outperform the market. You can track its progress by adding KV Pharmaceutical to your watchlist.
A precision investment
With offshore drilling permits still tough to come by, land drillers have been a better play for investors.
One of the Fool's resources gurus, Toby Shute, points out that Helmerich & Payne (NYSE: HP ) has particularly reaped benefits from the boom. So has Precision Drilling Trust, whose stock has risen 45% over the past six months. While Shute cautions about the cyclical nature of their earnings, CAPS All-Star member DarthMaul09 thinks market expectations will play a larger role at least for the immediate future:
The energy sector had been a lagger in the commodity rise in most of 2010. Many TV pundits had little good to say about the sector, especially after the BP spill and the Massey mining accident. But now things are different, profits are growing and the expectation of more energy use as pundits now believe that a recovery is at hand. Independent of the reality, if expectations are rising, the energy stocks will rise and that is what really matters to the stock market.
Drill down further on the Precision Drilling Trust CAPS page for additional insights on whether it can still succeed.
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.
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