Wall Street fawns over the companies listed in today's table. So why do our Motley Fool CAPS members disagree? They've tarred these stocks with one- and two-star ratings, showing a lack of faith that the associated companies will outperform the market.
So who has it right? The professional class of analysts sitting in their paneled offices smoking stogies, or a motley crew of community investors pooling their best thoughts for others to share? We think we know who'll come out ahead. How about you?
|
Stock
|
CAPS Rating (out of 5)
|
Wall Street Bullish Sentiment
|
| Advanced Micro Devices (NYSE: AMD ) |
**
|
58%
|
| CytRx (Nasdaq: CYTR) |
**
|
100%
|
| YRC Worldwide (Nasdaq: YRCW ) |
**
|
50%
|
Source: Motley Fool CAPS.
Now, as much as we love our CAPS community, don't sell these companies short just because they've garnered the lowest opinions. And don't buy 'em just because Wall Street says to, either. Investing requires closer diligence on your part, so use these ratings as a launch pad for your own research.
A heavy burden
Chipmaker Advanced Micro Devices has long struggled in the shadow of larger rival Intel (Nasdaq: INTC ) , but now that everyone is moving into graphics chips, it's NVIDIA (Nasdaq: NVDA ) that's become a closer competitor. And on that front, AMD scored a major coup by being chosen to power the next generation of MacBook Pro laptops from Apple.
Yet maybe there's less than meets the eye here. The MacBook doesn't have huge volumes these days; the tablet market is the hot corner for the time being. AMD won't be fully participating in that growing segment until 2012 -- too bad for investors, since some analysts say that tablets could account for 13% of computer shipments this year -- and it has no plans to enter the smartphone arena, even as that market continues to grow apace.
But at least one CAPS member isn't concerned: MRBillsnutjob thinks AMD "has a game-changer in the form of a dual-core processor and a graphics chip all in one" and asks us to "imagine how compact and cheap this will make motherboards."
There is some sense to that thought. Those same analysts looking for big growth in tablets this year also predict that the real growth spurt won't come till the following year, when they could make up as much as 30% of the market. But at the same time, with every company and its offshoot rushing to market with a tablet computer these days, the probability of a huge inventory glut could collapse the theory in on itself. Let us know on the Advanced Micro Devices CAPS page whether the chipmaker will be a graphic example of growth.
A no-win exchange
Because it's a development-stage biotech, CytRx finds revenues hard to come by. There have been very few catalysts that could propel the stock high enough to prevent it from being threatened with a delisting by the Nasdaq exchange. It's pretty much relied on the sale of stock to generate funds sufficient to operate, and although it says it believes it has enough cash on hand to survive for another year, it's going to need more results like the ones it achieved in a series of preclinical studies on bafetinib, a bone loss-prevention therapy.
But ultimate proof of bafetinib's viability is still a way off. And even if it does prove successful and CytRx is granted marketing approval, CytRx admits that it would take at least three years before the drug could establish a reliable revenue stream.
That explains why even though 90% of the CAPS members rating CytRx believe that it will outperform the market, it still carries just a two-star rating. There are just more compelling places for your money than here. However, if you want to keep an eye on its bone-loss treatment and the other two drugs it has in development, you can add CytRx to the Fool's free portfolio tracker.
Driving down the wrong road
The American Trucking Association says that truck tonnage volumes reached their highest levels in January since the beginning of 2008, aeven troubled YRC Worl dwide is benefiting from the news. Its own tonnage fell in the fourth quarter, but revenues per hundredweight rose and freight revenues increased, too, for a performance good enough that the company cut its losses nearly in half. Fitch Ratings admits that YRC's operating cash flows improved sequentially throughout last year.
But some significant risks remain. Despite little capital spending, the trucker still reported negative free cash flow for the year and had to win concessions from lenders to defer interest payments. It's also not contributing to its pension plan, and its debt load is fairly heavy. JB Hunt (Nasdaq: JBHT ) or Knight Transportation (NYSE: KNX ) are two truckers that offer more attractive valuations for investors looking to play trucking's recovery.
Add YRC to your watchlist to see how it survives this mess, and then head over to the YRC Worldwide CAPS page and unload your thoughts on its future.
What's wrong with that?
It pays to start your own research on these stocks on Motley Fool CAPS. 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 which side of the street will be the ultimate winner.
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