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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 hot upward leap.
Taking the market's temperature
But Motley Fool CAPS' proprietary ratings, aggregated from the opinions of 180,000-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 low-rated companies that have recently enjoyed a bump in investor confidence to the top tiers and see whether they're truly heating up -- or headed back to the deep freeze.
CAPS Rating (out of 5)
EPS Growth Next Year
|Kinross Gold (NYSE: KGC )||****||$11.15||23%|
|Veeco Instruments (Nasdaq: VECO )||***||$27.14||38%|
Source: Motley Fool CAPS, Yahoo! Finance.
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
Gold stocks should be doing better these days, but they're not, with some are doing worse than others. Kinross Gold lost more than a third of its value over the past year, and it certainly wasn't helped by the announcement last month that its controversial purchase of the Tasiast project in Mauritania two years ago was going to be delayed further, for as long as nine months. Fruta del Norte and Lobo-Marte are also expecting delays as well.
Delays aren't uncommon in precious metals. Hecla Mining (NYSE: HL ) was forced to shut one of its mine shafts to remove accumulated debris, and Newmont Mining (NYSE: NEM ) has seen its Conga project in Peru delayed indefinitely as protests have blocked its opening. Of course, such setbacks are usually accompanied by a stock plummeting in value, but there is still hope for Kinross.
Management argues that the wait for the Tasiast project will be worth it because of the resource expansion underway, with 8 million ounces of gold present when the acquisition was made to 21 million ounces today, at the completion of its drilling project. But production delayed is production denied, and the risk grows with Kinross as the timeline for growth gets pushed back.
But the CAPS community seems willing to take these risks, as 96% of the nearly 1,400 members rating the gold miner believe it will outperform the broad indexes. Add Kinross Gold to your Watchlist to see if it can jumpstart its production plans.
A bunch of dim bulbs
Adoption of LED lighting, which really is the next stage in lighting -- compact fluorescents are simply a way station to more efficient technology -- is accelerating, and falling prices will make it a more attractive lighting option in the future; that said, the immediate effect is to dim many bulbs in the sector.
Cree (Nasdaq: CREE ) missed earnings expectations last month; Aixtron reduced full-year guidance, citing margin pressures and delayed orders; and Veeco Instruments just reported that metal organic chemical vapor deposition, or MOCVD, equipment orders fell in the fourth quarter of last year and likely would fall more in the first quarter of 2012. MOCVD equipment is a critical tool used in LED production. It's apparent LED equipment spending remains depressed, and the market for them will continue to decline throughout the year.
Still, 94% of the CAPS All-Stars weighing in on the LED equipment specialist feel it can outperform the market. Add Veeco to the Fool's free portfolio tracker to keep track of its progress, and let us know on the Veeco Instruments CAPS page whether you think its future is still bright.
Checking the mercury
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