These Cold Stocks Are Heating Up

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.

Company

CAPS Rating
(out of 5)

Recent Price

EPS Estimates 
(This Year-Next Year)

Glu Mobile (Nasdaq: GLUU  )

****

$4.27

($0.31)-($0.23)

Aruba Networks (Nasdaq: ARUN  )

***

$34.09

$0.10-$0.27

Brigham Exploration (Nasdaq: BEXP  )

***

$37.39

$1.14-$1.93

Source: Motley Fool CAPS; NA = not available.

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
At the Consumer Electronics Show in January mobile-phone game developer Glu Mobile signed an agreement with NVIDIA (Nasdaq: NVDA  ) to develop games for the Android platform that generated a lot of fanfare, and last week said it was releasing some of its top titles for the Android platform to Amazon.com's (Nasdaq: AMZN  ) Appstore.

But it hasn't forgotten Apple's platform either. It just announced it would be releasing its RPG app "Contract Killer" for the iPhone, iPad, and iPod touch. While Apple and Amazon duke it out over the rights to the word "app," Glu is content to supply both with its games for its own profit.

CAPS member ReydaV points to a recent investor presentation Glu made as solidifying his thesis the social game maker is a buy.

A great presentation / powerpoint on the potential of GLU and an indepth look at it's business model and future endeavors. Must-See for any GLU investor. I believe you have to play the webcast (top left) and coordinate it with flipping through the power points personally. Great information and a welcome transparency.

You can let us know on the Glu Mobile CAPS page whether this is a horse of a different color … or one ready for the glue factory.

Padding your lead
Apple is also the catalyst for growth at wireless networking specialist Aruba Networks. The launch of its iPad helped foster Aruba's "bring your own device" architecture which allowed employees to access enterprise wireless networks.

Now as the iPad 2 gains traction, Aruba is helping businesses keep their networks secure with its mobile virtual enterprise initiative that keeps both wired and wireless networks secure even while integrating the use of outside devices.

As the market gets flooded with new tablets this year from Motorola Mobility (NYSE: MMI  ) , Hewlett-Packard, and other manufacturers, Goldman Sachs says demand for Aruba's technology will be so great the probability it gets acquired in 2011 is pretty high.

Wall Street is unanimous in its belief it will be able to beat the broad market averages, and with 90% of the members rating it to outperform, the CAPS community is pretty bullish too. You can keep tabs on its progress by adding Aruba Networks to your watchlist.

Getting the urge
While President Obama recently called on the energy industry to produce more oil and gas so as to decrease the amount of imports drastically, critics have been quick to cite a slow permitting process as a major problem. In addition, while he called out both the Marcellus and Eagle Ford shale plays as areas where he sees our future independence coming from, he was also critical of "fracking," the process of accessing the oil hidden in the rock by hydraulic pressure.

EOG Resources (NYSE: EOG  ) , Brigham Exploration, and other oil and gas exploration companies have benefited from the hydraulic fracturing process. The President has asked the Secretary of Energy to work with the industry to come up with new techniques on extracting oil and gas.

Highly rated CAPS All-Star marc64 says that with many other alternative energy sources untenable right now, you're really only left with one: natural gas, and that means Brigham has a bright future.

This is a bet that the world is going to be in a buying mode to procure possible gas resources, and this little bitty will do well to be in the niche that finds those resources...

Will Brigham do well? Give us your opinion on the Brigham Exploration CAPS page, and you can also keep track of the company's operations by adding the oil and gas play to the Fool's free portfolio tracker.

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.

Apple and Amazon.com are Motley Fool Stock Advisor recommendations. The Fool has written puts on Apple. Motley Fool Options has recommended a bull call spread position on Apple. The Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Rich Duprey owns shares of Motorola Mobility but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.


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