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Some companies are obviously great investments -- in hindsight. Yet for every stock out there screaming "buy me," others simply give us a nudge and a nod. How can we tell tomorrow's obviously great investments from the thousands of pretenders?
The stars' walk of fame
On Motley Fool CAPS, these opportunities can be found among our four-star stocks, companies that rank higher than most of the other 5,400 starred companies, but fall just short of a top ranking. While all the attention might be focused on their five-star peers, we can sift through CAPS to find four-star firms approaching greatness. Here are a handful of stocks that are approaching greatness.
- CME Group (NYSE: CME )
- Coeur D'Alene Mines (NYSE: CDE )
- Endeavour Silver (NYSE: EXK )
- Northern Dynasty Minerals (NYSE: NAK )
- Vical (Nasdaq: VICL )
Some of these names might surprise you. For example, biotechs have been taking a drubbing lately as the FDA rejects applications left and right or clinical trials land with a thud. Vical is no different as its stock was crushed last October when its blood vessel regeneration therapy being developed with sanofi-aventis was found to be no more effective than a placebo. Almost great? Even familiar names can still offer some of the best opportunities. Perhaps we've just forgotten the potential they still hold.
The Pebble copper-gold-molybdenum project in southwestern Alaska is a veritable gold mine of opportunity for Northern Dynasty Minerals, and helps explain the 150% run-up in its stock of the past six months. As the 170,000-plus CAPS members have chosen these companies as less obvious sources for tomorrow's great buys, let's see why they might merit your attention.
In the sight of greatness?
It could have gotten into a bidding war with Deutsche Bourse for New York Stock Exchange owner NYSE Euronext (NYSE: NYX ) , but futures exchange operator CME Group is a closer competitor to the electronic Nasdaq OMX exchange than the Big Board so it makes more sense for it to go after the options exchange leader CBOE Holdings. While the NYSE's derivatives market would have dovetailed well with its own operations, analysts believe it might have raised antitrust concerns, making any bid problematic.
With or without a merger in the works, the 16 analysts covering CME Group are unanimous in believing it will outperform the broad market indexes, and the CAPS All-Star community is bullish too, with 96% expecting it to beat the Street.
Everyone talks about gold, but silver's been ramping up as well, which helped major silver miner Coeur D'Alene Mines dig deep to produce higher fourth-quarter profits and surging production numbers. CAPS member wowdwarf likes that while it is seen mostly as a silver miner it's been throwing out greater nuggets of gold, too.
Ramping up of silver is also why we're seeing Endeavour Silver running away from the market as well. It announced expanded capacity at its Guanajuato processing and this year expects to boost production by 12% to hit 4.7 million ounces of silver equivalent. What really catches an investor's eye is operating profit margin north of $18 an ounce based on conservative silver price forecasts of $24 per ounce. For the record, silver is trading over $36 an ounce today.
CAPS member noargos says Endeavour is especially attractive because it is such a low-cost silver miner.
Aggressive management with outstanding skill at finding and producing silver at a low cost. Stage set for blow out earnings over the next few quarters even if Silver sits still (which at this time it is not!-35.00 at time of this post)
What we're witnessing is the full development of a muscular bull market for silver. With global and macroeconomic concerns still unraveling, the pent-up excitement for the precious metal is getting unleashed.
But these names won't be alone in getting the goods on growth. Silver Wheaton (NYSE: SLW ) , arguably the most profitable company in the world, is chewing up the market and spitting out a shiny, new $0.03 per share quarterly dividend. Even if you can find a company that's more profitable -- a few people have thrown out names of several REITs that have margins over 90% -- which has the better growth prospects and which would you rather own?
Add any of these miners to the Fool's free portfolio tracker and keep an eye on all the news and analysis that develops.
A great opportunity for you
Investor sentiment suggests these four-star investments still seem to be on their way to five-star greatness, but 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 let us hear what you have to say about the great and almost great companies that interest you.