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.
Wall St. Picks
Wall St. Bullish Sentiment
Est. EPS Growth Next Year
|Cardero Resource (AMEX: CDY )||****||0||NA||NA|
|Veolia Environnement (NYSE: VE )||****||2||50%||58%|
Source: Motley Fool CAPS. NA = not available.
Remember, without much analyst support, you'll have to do more scouting on your own to see whether these stocks deserve a spot on your portfolio's roster. Don't just buy or sell them based solely on their appearance here.
A true cookie monster
From paint to planes, body replacement parts to Oreos, titanium has a multitude of uses (yes, the brilliant white creme inside an Oreo is produced with titanium dioxide). Titanium Metals (NYSE: TIE ) reported a 7% increase in operating profits on a 25% increase in revenues as the aerospace industry in particular demanded more melted and mill products over the first nine months of its fiscal year.
Yet despite all the demand for titanium (Oreos represented more than $1 billion in annual sales for Kraft), there's a bit of a supply constraint. DuPont (NYSE: DD ) , the world's largest producer of TiO2, is the only one that will be expanding capacity, and that's not expected to come online until 2014. That bodes well for Cardero Resource, which recently received positive resource estimates for its Titac and Longnose projects in Minnesota, giving it two economically feasible mines for commercial production of titanium and iron ore. Although undoubtedly years away from actual production, Cardero has seen its shares rise sharply from the low point hit late last year, even if it has given back some of those gains in the past month or so.
Wall Street hasn't latched onto the story yet, so the miner is still flying below its radar, giving investors an opportunity to discover this rich, still undervalued vein for themselves. But just because analysts are blind doesn't mean the CAPS community is: 96% of the 180 members weighing in believe Cardero's stock will outperform the market averages.
Add Cardero to the Fool's free, personalized stock-tracking service and see how long it stays off the analyst community's grid.
A smelly situation
French waste management and drinking water supply specialist Veolia Environnement is a company in transition and turmoil. It's caught up in an accounting scandal that emerged in its marine services division, which was hurt following the BP oil spill in the Gulf of Mexico, and some on the board of directors are in revolt against the sitting chairman and CEO. When Veolia holds its annual shareholders meeting next week, it's possible he'll be ousted from his positions.
Motley Fool blogger Eric Volkman notes the Lynchian qualities of Veolia, considering its many unglamorous business lines, and points to its tempting dividend, though he concludes it's not sustainable:
These are certainly not sexy activities, but they do pull in bucks, which the company is happy to share generously -- it has one of the highest dividend yields going, at nearly 14%. That's likely not sustainable given Veolia's debt position (more than 3x cash at the end of the last fiscal year), but the firm is a habitual dividend payer that always seems to find a way to return money to its shareholders.
Let us know on the Veolia Environnement CAPS page whether it can clean up its act in a timely fashion and add it to your watchlist to be alerted to developments that arise out of the shareholders meeting.
Swing for the fences
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