For every stock out there screaming "buy me," others simply give us a nudge and a nod. While all the attention might be focused on their five-star peers, we can sift through Motley Fool CAPS to find four-star stocks giving us the "high sign" they're approaching greatness.
These opportunities -- including familiar names and beaten-down companies -- rank higher than most of the other 5,400 starred companies, and it pays to investigate their potential. For consideration today I've got this handful of stocks on their way to fame.
- Amarin (Nasdaq: AMRN )
- SUPERVALU (NYSE: SVU )
- TD AMERITRADE (Nasdaq: AMTD )
As the 180,000-member CAPS community has 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?
Even if management says it doesn't want to get acquired, preferring to remain a stand-alone cardiovascular disease drug developer (a sentiment that actually sent its stock lower), Amarin seems destined to be one of those companies that will get swallowed up anyway.
Its triglyceride-lowering fish oil therapy, AMR101, is ready to submit a new drug application in the fall, and by all appearances the drug should do better than either GlaxoSmithKline's Lovaza or Abbott Labs' (NYSE: ABT ) Tricor and Trilipix.
Despite Amarin's stock being up more than 540% over the past year, earnings next year are expected to double with long-term growth rates pegged at 65%. Getting the drug on the market seems geared to send the drugmaker higher still.
CAPS member serenas5 agrees, and says that if management remains intransigent to offers that are sure to follow, someone will take it directly to the shareholders:
[Amarin] has a drug that has produced significant results via its 2 completed phase 3 trials. It has opened the eyes of many big pharma companies. I think it will be involved in a hostile takeover prior to the end of the year.
Let us know on the Amarin CAPS page whether it will ascend to even loftier heights as a result of its grand plan.
Food for thought
As if competition from Wal-Mart and Kroger (NYSE: KR ) wasn't enough, supermarket chain SUPERVALU has been contending with a heavy debt load that's weighing it down. As CAPS member JPAKolypse86 points out, the company's market cap of $2 billion is dwarfed by its billions more in indebtedness. Yet this CAPS member goes on to note that the grocer is slowly paying down the balance and offers a healthy dividend yielding 3.7% currently:
Now the good news. There have been downers saying that these guys won't last another month for almost a year now. Yet they are still here. And they are paying down their debt a little bit at a time, like good accountants do. It will take a while for them to get back into safe territory, but i believe that the worst is behind them.
Challenges remain, of course, before SUPERVALU can realize its full potential. Rising commodity costs are pinching margins for grocers caught between the rock of absorbing some of the increases and the hard place of passing them along. SUPERVALU reported better-than-expected earnings this morning as it was able to cut costs, but it will be tough to determine where else it can trim.
Labor problems could also impede its growth. SUPERVALU, Kroger, and Safeway (NYSE: SWY ) agreed to a profit-sharing plan in 2003 in the event that unions struck against any of them, but a federal appeals court now says they may have violated antitrust laws.
The CAPS community generally thinks SUPERVALU will be able to overcome these hurdles, as 98% of the All-Stars weighing in believe it will beat the market indexes going forward. Add SUPERVALU to your Foolish watchlist and see if the grocer can make you some green.
Trading up
I ended up having my brokerage accounts at TD AMERITRADE because it bought up discounter Datek many years ago. I had switched over from E*TRADE Financial (Nasdaq: ETFC ) because I do all my own research and, at the time, E*TRADE's transaction fees were significantly more than the discounters' while the tools available were on par with everyone else.
Now it looks like I might have ended up at AMERITRADE even if I had stayed with E*TRADE, since the latter's biggest shareholder urged it to put itself up for sale and TD AMERITRADE is interested in making a bid. As one of the more robust investment houses, it might be said to have the inside track on a successful offer.
The markets definitely liked the idea of AMERITRADE buying E*TRADE, as shares are 10% higher this week, though Charles Schwab might also be considered a suitor, as could Bank of America.
CAPS member jquigretired saw AMERITRADE as an all-around solid investment even before the acquisition speculation began:
[TD AMERITRADE] is a solid brokerage firm, both online and in their branch offices. They have a large amount of research items for investors to use, and good information for the new investor as well. A decent dividend @.20 per share, overall I see this company moving forward into the next year.
Let us know in the comments section below or on the TD AMERITRADE CAPS page if you think its buying E*TRADE is the right trade.
A great opportunity for you
Investor sentiment suggests these four-star investments 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.
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