When a stock's share price is lower than a North Dakota thermometer in February, investors tend to give it the cold shoulder. But as the market warms to a stock's prospects, its price can heat up in a hurry. Alas, you can rarely tell that a stock is melting investors' hearts until after it's made that upward leap.
Taking the market's temperature
But Motley Fool CAPS' proprietary ratings, aggregated from the opinions and accuracy of 170,000-plus members, offer a great way to monitor investor sentiment. Following a CAPS rating trend can help us determine the best time to invest. Let's look at previously rated one- or two-star companies that have recently enjoyed a bump in investor confidence and see whether they're truly heating up -- or headed back to the deep freeze.
(out of 5)
(This Year - Next Year)
|Amarin (Nasdaq: AMRN )
||($0.35) - ($0.21)
|Qiao Xing Universal Telephone (Nasdaq: XING )
||NA - NA
|UR-Energy (NYSE: URG )
||($0.48) - ($0.08)
Source: Motley Fool CAPS; NA = not available. EPS = earnings per share.
Obviously, this is not a list of stocks to buy -- just a starting point for further research. Yet if some of the best investing minds are taking notice of these stocks, maybe we should, too.
Caution: Contents may be hot
New study results on Amarin's medicinal-grade fish-oil drug, AMR101, showed it significantly lowered triglyceride levels without raising "bad" LDL cholesterol, while meeting all of its endpoints for safety, possibly making it superior to even GlaxoSmithKline's (NYSE: GSK ) Lovaza, currently the only approved omega3 treatment for high triglycerides.
The stock has retreated about 12% over the past month and is down 22% from the 52-week highs it hit after the clinical trial results. Although there has been speculation that someone like Glaxo or Pfizer (NYSE: PFE ) might be interested in acquiring Amarin sooner rather than later based on the promise AMR101 holds, Pfizer's decision to cut back on its acquisitiveness seems to be the catalyst that started the slide.
This suggests there's a window of opportunity opening for investors who believe the next round of results for AMR101 will be just as positive as the last. Since there is no news to account for Amarin's decline, even at these lofty levels it might be an attractive candidate for your portfolio, particularly if, as CAPS member vic929 says, it will be bought by someone eventually.
Let us know on the Amarin CAPS page whether it's swimming to the top.
A glowing opportunity
I haven't exactly hidden my disdain for Chinese telecom-cum-miner Qiao Xing Universal Resources. While it has been acquiring various mining assets -- including a 35% interest in a copper-molybdenum mine in Inner Mongolia that apparently helped it soar high on speculative bets on rare-earth mineral resources -- the stock has fallen more than 40% from that perch. The rare-earth metals crisis was apparently much ado about nothing, but Qiao Xing does appear to be collecting some serious mining plays.
Of course, it's still in the process of reacquiring Qiao Xing Mobile (NYSE: QXM ) , which it spun off a few years ago. Apparently the business isn't bad enough to have the company just strip out the cash the telecom has on its balance sheet.
Although the miner is gaining favor with the CAPS community, I don't think it will be able to beat the market, and I therefore leave my underperform rating intact. You can follow along with Qiao Xing as it decides whether it really wants to be a miner or a telecom by adding it to your personalized watchlist.
Getting the urge
You always know when a company's press release starts off with a winding introduction that the news that follows isn't going to be good. So it was with the announcement UR-Energy put out a week or so ago regarding its Lost Creek uranium deposit in Wyoming. The company finally got around to saying that a previous report it relied on overstated the deposits by about 6%, resulting in an approximate 6% decrease in anticipated production.
On the positive side, the new report confirms the project is viable at prices for U3O8 uranium above $40 a pound, and currently it goes for around $70 a pound. With 441 nuclear reactors in operation, 63 new reactors being built, and an additional 156 ordered or planned, there's going to be a lot of demand for the volatile metal. There is a monster opportunity in Cameco (NYSE: CCJ ) as well, even if its stock has also pared back some of its recent gains.
CAPS member johndoe31 believes UR-Energy has all its ducks in a row and will still have an afterglow when all is said and done: "most permits are completed, mining will begin this yr 2011,the price of uranium could continue higher since, I believe world demand will be strong."
You can keep track of UR-Energy's operations by adding the uranium miner to the Fool's free portfolio tracker, and if you have the urge, provide us with your own insights into how its development program will work out on the UR-Energy CAPS page.
Checking the mercury
Are these stocks invitingly warm or bitterly frosty? It pays to start your 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. Then weigh in with your own thoughts on which stocks you think are hot little numbers, and which offer cold comfort. It's free to sign up.