When asked for the secret of his success, baseball player Wee Willie Keeler replied, "Hit 'em where they ain't." What worked for Willie at the plate applies equally well in investing.
Seeking stocks that others ignore, shun, or simply forget gives individual investors like you an edge over the professionals. When Wall Street turns a blind eye, you have a chance to get in before these stocks get discovered -- or rediscovered -- and start taking off.
Below, we'll check out companies with only a handful of analyst coverage, then pair our list with the opinions of the Motley Fool CAPS community. A stock that garners CAPS' top ratings, but hasn't yet caught analysts' attention, could be your next home run investment.
|
Stock
|
CAPS Rating
(out of 5)
|
Wall St. Picks
|
Est.
EPS Growth
Next Year
|
| Paramount Gold & Silver (NYSE: PZG ) |
**** |
0 |
0% |
| Patriot Coal (NYSE: PCX ) |
**** |
5 |
204% |
| Zix (Nasdaq: ZIXI ) |
**** |
4 |
25% |
Source: Yahoo! Finance; Motley Fool CAPS.
Remember, without much analyst support, you'll have to do your own scouting to see whether these stocks deserve a spot on your portfolio's roster. Don't just buy or sell them based on their appearance here.
Hiding in plain sight
It's often suggested that if you want to bet on a rise in the price of gold, you should buy an ETF like SPDR Gold Trust, which buys actual bullion to hold, rather than gold mining stocks like Paramount Gold & Silver or Golden Star Resources. And there's even some sense to it.
Over the past year, the price of gold is up about 23% (having at one point been up 45% when gold hit $1,900 an ounce). During that same period, Golden Star has fallen 63%, NovaGold (NYSE: NG ) is down 27%, and even major miners like Goldcorp have underperformed physical gold, rising just 5% in the past 12 months.
But choosing carefully can still help you pick good miners to own. Paramount, for example, is up 40% year over year and its new resource estimate for the Sleeper project it recently acquired showed prodigious amounts of gold and silver. Investors think Paramount has a good chance of being acquired itself.
CAPS member markhertz says Paramount makes an obvious choice for Coeur D'Alene Mines (NYSE: CDE ) , which is in full swing right next door:
The mining company besides them is in full operation with all the infrastructure in place, both digging and selling their gold on the open market. If they dont buy PZG, they will be allowing an easy decision to any CEO and board of directors to buy them out now to turn instead into a bidding war with other companies.
Let us know on the Paramount Gold & Silver CAPS page if you think some gold miners are worth their weight in gold, then add the stock to your watchlist to track its progress.
Canary in a coal mine
Coal prices that had been rising all year long have suddenly turned south, leading to worries that Patriot Coal or Arch Coal (NYSE: ACI ) will continue to pressure miners. Patriot's stock is down 56% year to date while Arch is off 58%. Over the past year, the CAPS coal sector has fallen 16%, with the companies comprising the niche losing a quarter of their value in just the past month.
It seems an inopportune time for Patriot to have made a bigger push into met coal. It hopes its met build-out project leads to stronger operating results in the future, but for right now, it's just increasing its costs, with costs per ton rising as a result of new metallurgical mines coming on-line and met tons being a larger portion of total sales mix. James River Coal (Nasdaq: JRCC ) finds itself in a similar situation, having bought International Resource Partners earlier this year to capture rising prices, only to watch them turn tail.
With 96% of the CAPS members rating Patriot believing it will outperform the market over the long haul, investor opinion seems to be that the pricing issue is a temporary setback. Add the coal miner to your watchlist to see whether it's near an inflection point to capture greater growth ahead.
Safe and secure?
The spate of high-profile hacking incidents seems to have subsided for the moment, but for some companies, like Vasco Data Security, the damage is already done. Its DigiNotar subsidiary has all but gone bust after it issued a digital certificate to an entity fraudulently claiming to be Google; some say it was the Iranian government, spying on its citizens.
According to email encryption specialist Zix, the majority of security breaches are caused by improper email practices by employees. More than half of the 830 information technology, security, and compliance professionals it surveyed said email was the soft underbelly in a company's security armor.
In spite of this, Zix's shares have fallen by 45% from recent highs, but for CAPS member Teacherman1, that's just what he was looking for:
Just where I wanted to get it for a longer term hold. Just above its 52 week low. In light, will watch and add as opportunities arise.
Add the security specialist to the Fool's free portfolio tracker and tell us on the Zix CAPS page why you think this stock might be a safe bet.
Swing for the fences
When seeking investments where no one else is looking, Motley Fool CAPS is the best place to start your own research. 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 whether these hidden stock opportunities will help us go one up on Wall Street.
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