Wall Street's Wrong About These Stocks

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

Dell (Nasdaq: DELL  ) ** 91%
Novavax (Nasdaq: NVAX  ) * 83%
Pluristem Therapeutics (Nasdaq: PSTI  ) ** 100%

Source: Motley Fool CAPS.

Now as much as we love our CAPS community, don't sell these companies just because they've garnered low ratings. 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 launching pad for your own research.

Still huffing and puffing
Doesn't anyone want to make computers anymore? Hewlett-Packard's (NYSE: HPQ  ) decision to abandon the PC market is only the latest symptom of a movement that began when IBM (NYSE: IBM  ) sold off its computer business to Lenovo.

Some might point to Dell as a computer maker still, but even there the focus has largely shifted away from desktops (and even laptops) and focused more on software and business services. The analysts at Trefis peg Dell's computer business at just 18% of the company's value while managed services, consulting, and Perot account for 21%.

If imitation is the sincerest form of flattery, then IBM must be feeling particularly puffed up as both HP and Dell follow its lead out of the computer business. Of course, that leaves the field primarily to Apple (Nasdaq: AAPL  ) as the world moves to tablets and the niche becomes a one-horse race.

Of course, Dell still is producing computers whereas HP may not be much longer and as CAPS member pchop123 points out, the rival's exit could be good news for Dell's own brand.

Leaving when you're on top is always a valued strategy, one that HP is apparently following. It's currently the largest PC maker with 18% global market share, followed by Dell at 12.9%. With Lenovo close on Dell's heels with a 12.2% share, it won't be long before it overtakes it for the No. 2 spot and effectively allowing it to assume the mantle of largest computer maker when HP bows out.

Tell us on the Dell CAPS page whether you think it can recover its once dominant position in the industry or should it continue down the path HP and IBM have taken.

A rare breed
I like it when an insider buys his stock. I like it doubly so when the CFO does it since he's got his finger on the pulse of what makes his company grow. But what do you do when there's an orgy of insider buying? If you're CAPS member dcsilver, you buy right alongside them!

He notes that antiviral maker Novavax is currently suffering from a surfeit of insider buying. From the president and CEO to the CFO and treasurer, insiders have been scooping up shares of Novavax stock.

Forget the company, forget what they do for a second, forget that shares of NVAX are down despite positive study results on the company's H1N1 virus-like-particle pandemic influenza vaccine, forget the data indicated that NVAX's H1N1 VLP vaccine was well-tolerated and immunogenic.... Forget all that blasphemous news. Just look at the recent insider transactions

It's not a surefire guarantee of success. Earlier this year, General Maritime saw a bunch of insiders buy its stock (including the CFO), but its kept right on sinking. Yet Six Flags Entertainment experienced a big run up in its shares following its CFO's purchase, and while it has given back some of those peak gains, it still trades higher than it did and lends credence to it being a signal to watch.

You can watch Novavax by adding the antiviral maker's stock to the Fool's free portfolio tracker.

A certain disconnect
Doctors in Sweden were able to save a man's life by replacing his trachea -- blocked by a cancerous tumor -- with one grown in a laboratory using stem cells. The success of the operation, and the validity it shows residing in stem cell research, helped at least temporarily lift StemCells, Pluristem Technologies, and Geron (Nasdaq: GERN  ) , along with many others in the space

There seems to be a spate of good stem cell news, from a South African rugby player getting stem cell therapy treatment to doctors in Dallas curing back pain by injecting a patient's own stem cells to grow new bone, the technology continues to advance. And yet the stocks of many of the industry's leading names lag. Neostem's shares are down 56% for the year, StemCells is down 80% -- and Pluristem is up 80%!

Highly rated CAPS All-Star zzlangerhans is leery about Pluristem's history of corporate governance lapses:

There's always an outside chance that this company is simply doing what it has to in order to survive and prove their therapy actually works. Empirically however, virtually all stocks with this kind of history prove to be failures if not outright scams.

You can follow along by adding Pluristem to your your watchlist and have all the news and analysis about its progress aggregated in a single location.

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.

The Motley Fool owns shares of Apple, IBM, and General Maritime. Motley Fool newsletter services have recommended buying shares of Apple and Dell, as well as creating a bull call spread position in 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. The Motley Fool has a disclosure policy.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here.


Read/Post Comments (3) | Recommend This Article (3)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On August 29, 2011, at 8:41 AM, dcsilver wrote:

    Provocative title, little actual analysis. Since I’m quoted on NVAX, I’ll limit my thoughts to that stock only. The CAPS rating is over time. You can’t tell when people started changing their opinions. At $3.00 a share, I don’t like NVAX. At $1.20 where the insiders purchased this is a 4/5 star stock. You can see my previous two blogs for my thinking one these topics in addition to the inside cluster buys.

  • Report this Comment On August 29, 2011, at 2:02 PM, BillCohen wrote:

    The biggest run up is likely to occur in shares of KOOL. BV, cash, zero debt and revenues which will quadruple once China finalizes the contract for stem cell storage will easily double the share price. Everyone grew impatient and sold because the CEO is not one to hype with press releases so he waits till contracts are finalized before announcing. Bargain pps now.

  • Report this Comment On August 29, 2011, at 11:45 PM, NanoORBust wrote:

    Pluristem has had it's issues in past years but IMHO the tide has turned and you may want to cover and go long. Look at the huge secondary they did earlier this year at $3.25 which was fully subscribed. Look at the latest deal with UTHR and now the orphan drug status. The real disconnect that I see is the difference in valuation between Pluristem and Mesoblast. Follow the money.

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