Despite all of Wall Street's conflict and contention, a fortunate few companies enjoy unanimous support among professional analysts. If the market's movers and shakers all believe these companies will beat the long-term averages, well, surely they will -- right?
Not so fast! With help from the 180,000 members of Motley Fool CAPS, we'll see whether these high-flying favorites deserve analysts' unwavering support.
|
Stock
|
CAPS Rating (out of 5)
|
CAPS Bullish Sentiment
|
No. Wall Street Analysts
|
52-Week Price Change
|
| Gold Resource (AMEX: GORO ) |
* |
50% |
1 |
(21%) |
| OCZ Technology (Nasdaq: OCZ ) |
*** |
94% |
2 |
89% |
| PotashCorp (NYSE: POT ) |
**** |
96% |
24 |
(10%) |
Source: Motley Fool CAPS.
As you can see, there's a wide range of results, so just because Wall Street loves ' em doesn't mean you have to. Use the list as a jumping off place for your own research.
Pieces of eight
Some of the biggest names in gold and silver mining are pegging their dividends to the price of precious metals. Hecla Mining (NYSE: HL ) became the first to tie its dividend to the price of silver, while El Dorado Gold and Newmont Mining (NYSE: NEM ) have done the same thing with gold prices. As the price of the metal rises, so does the value of your dividend (and vice versa).
But Gold Resource has done them one better. It wants to pay its dividend in gold and silver bullion. That may sound like a better bet, getting physical gold in your hands, but it also smacks of being very gimmicky. First, you need to own a lot of stock to get just one ounce of gold (almost $60,000 worth of stock). It's far easier to divvy up a dividend payment in currency than in an actual metal, but then transferring the gold and storing it is going to eat into the value of the dividend as well.
A year ago I pegged Gold Resource to underperform the broad market indexes because, despite moving from an exploration-stage miner to production-stage, it couldn't meet SEC definitions of proven or probable reserves, and handsomely rewards management with lavish stock options. As it still can't meet those definitions and since it's still handing out stock options hand over fist -- they accounted for more than half of general and administrative expenses in the most recent quarter -- I'm letting my underperform rating ride.
Tell me in the comments section below or on the Gold Resources CAPS page whether this is a gimmick-laden gold company, and then add it to your watchlist to see how it pans out.
No-spin zone
There's a reason OCZ Technology is riding a wave of support on Wall Street and Main Street: A confluence of events has created a unique opportunity for the storage specialist, and it's sitting at the right spot with the right products at the right time.
Hard-disk drives may never fully disappear, but the movement toward solid-state drives is inexorable. While cost has been a factor in holding them back from wider adoption, the widespread flooding that devastated Thailand has washed out Western Digital for the moment, and Seagate Technology (Nasdaq: STX ) may face parts shortages even if it didn't get swamped like its rival.
While STEC could have gained ground too, it gave a rather glum outlook last month that suggests it can't capitalize on the situation. That leaves OCZ as the primary beneficiary, as it just reported that revenues for the quarter and the year are likely to exceed initial expectations.
To quote myself, it's why I rated OCZ to outperform the broad market averages: "Flooding in Thailand will dry up HDD market for awhile giving SSD makers like Ocz a chance to prove their mettle. Recent acquisitions also make Ocz a stronger competitor to WDC and STX, and bolster its decision to make SSDs its core business."
Add OCZ to your watchlist to see whether it can maintain its growth trajectory, and see what others are saying by heading over to the OCZ Technology CAPS page.
Planting seeds of growth
Agricultural industry economists are looking for higher cost inputs that will keep crop prices high. While fuel costs are actually expected to ease back in 2012, fertilizer prices should keep rising sharply, with nitrogen, phosphorous, and potassium all expected to run 25% to 40% over this year's prices.
It was this year's similar pricing conditions that helped PotashCorp report a strong third quarter, with potash-specific sales doubling and profits up 147% from the year-ago period. Mosaic (NYSE: MOS ) and other fertilizer makers also benefited from the elevated price environment. Analysts expect PotashCorp to see earnings jump 80% this year over 2010 figures, though 2012 growth is expected to moderate with just a 20% rise.
Higher prices next year have convinced CAPS member theboo33 that it's time to back PotashCorp, but what's your view? The takeaway with fertilizer companies has always been that the world needs to eat, recession or not. Let us know in the comments section below if that makes PotashCorp and its peers a sure thing, then track the results by adding it to your watchlist.
Agree to disagree
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 whether these stocks deserve to have Wall Street marching lockstep.
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