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 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 into the deep freeze.
|
Company
|
CAPS Rating (out of 5)
|
Recent Price
|
EPS Growth Next Year
|
| Antares Pharma (AMEX: AIS ) |
**** |
$2.51 |
NM |
| Silvercorp Metals (NYSE: SVM ) |
**** |
$7.02 |
1% |
Source: Motley Fool CAPS; NM = not meaningful.
Obviously, this is not a list of stocks to buy -- just a starting point for further research. But if some of the best investing minds are taking notice of these stocks, maybe we should as well.
Caution: Contents may be hot
It's been well established the market was wrong to knock Antares Pharma down in the wake of the FDA not approving BioSante Pharmaceuticals' (Nasdaq: BPAX ) LibiGel "female Viagra." The revenues derived from BioSante account for only a small portion of Antares's total. As a result, the biotech has regained all of the ground lost since that news was announced.
But BioSante was back in the news with reports that its low-testosterone treatment Bio-T-Gel that it's partnered with Teva Pharmaceuticals (Nasdaq: TEVA ) did get the regulatory nod. Hypogonadism is a billion-dollar business, which also means it's a crowded one, so BioSante will have its work cut out for it in elbowing Bio-T-Gel into the market.
That works out for Antares no matter what, because it apparently also makes the gel used to deliver the testosterone therapy. So whatever sales BioSante makes, there will be revenues flowing to Antares, too. And with a new collaboration agreement just inked with Pfizer (NYSE: PFE ) , CAPS member dheatguy is confident all the irons it has in the fire will pay off.
That helps explain why 96% of the 161 CAPS members, myself included, rating the biotech believe it will outperform the broad indexes. Add Antares Pharma to your Watchlist to see if its growth plans gel for the immediate future.
Mining an excuse
Whatever you might think about the alleged scurrilous accusations that were hurled at Chinese silver miner Silvercorp Metals, I shake my head at management using it as an excuse to explain why production at its Ying mine fell almost 12%. You mean miners couldn't dig because short sellers said bad things about the company? Fortunately, the "short and distort" attack didn't distract the workers at its GC project since that's moving forward towards development, nor did it affect the efforts at BYP, XBG, XHP, or Silvertip. Those Ying workers really need to focus.
I've previously said Silvercorp should publicly ignore the short attack beyond the investigation it conducted into the allegations and found them lacking: "It should let that suffice and tend to its knitting, or silver mining, and let its performance prove the short-sellers wrong.”
Management's willingness to continue focusing on the matter and placing blame on it for productions issues (it also blamed a labor shortage secondarily as a reason for the shortfall) suggests there are deeper issues involved. I wouldn't go so far as to say the short sellers are right, but it undermines management's credibility to lay the problem at the foot of an issue largely removed from actual operations.
I just rated it to underperform the indexes on CAPS, but you can add the silver miner to the Fool's free portfolio tracker to keep track of its progress. Then let us know in the comments section below or on the Silvercorp Metals CAPS page if you agree management has a credibility problem.
Checking the mercury
Are these stocks invitingly warm or bitterly frosty? The Motley Fool has identified rock-solid investments that will lead you to a secure financial future. The report is free, but it's available only for a short time, so get your copy today and find out which dividend-paying stocks made the cut.
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