Wall Street can't generate enthusiasm for the companies listed below. So why do our Motley Fool CAPS members disagree? They've bestowed on these companies the highest four- and five-star ratings, signaling their faith that the associated businesses will outperform the market while Wall Street offers lackluster support at best.
So who has it right? The professional class of analysts sitting in their paneled offices smoking stogies, or a motley crew of community investors pooling their best thoughts for others to share? We think we know who'll come out ahead. How about you?
CAPS Rating (out of 5)
No. of Analysts
Wall Street Bullish Sentiment
CAPS Bullish Sentiment
|Agnico-Eagle Mines (NYSE: AEM )
|STEC (Nasdaq: STEC )
Source: Motley Fool CAPS.
Now as much as we love our CAPS community, don't buy these companies just because they've garnered top ratings. And don't sell 'em just because Wall Street says to, either. Investing requires closer diligence on your part, so use these ratings as a launching pad for your own research.
Gold futures had a pretty remarkable run in 2011, marking their 11th consecutive annual increase, and they're up more than 11% again so far this year. Those higher prices are causing gold producers to boost production plans. According to a survey by PriceWaterhouseCoopers, three-quarters of gold producers are looking to spend excess cash on project development, and more than half will be doing more exploration.
That said, Agnico-Eagle Mines had a rough year last year, suffering from rising costs that caused it shut down its Goldex mine and write down of its Meadowbank mine. As a result, its payable gold production will fall as much as 11% this year. However, if you excluded the Goldex mine from last year's production numbers, Agnico's numbers could be as much as 12% higher in 2012. Still, it's facing cash costs that are expected to be nearly 25% higher this year.
While exploration and production rank high for gold miners, so does paying dividends. Agnico has paid a dividend for 30 consecutive years and recently raised its quarterly payment 20%. Newmont Mining (NYSE: NEM ) and others are getting creative by tying the payment to the price of gold, and 25% of the miners surveyed expect to pay a dividend this year.
CAPS member kurtdabear thinks the market has overreacted to Agnico's mine problems and sees a silver lining coming out of it.
Since they've totally written off their failed mine, but still own the property, things can't really get any worse there, but they could get better. For instance, equipment from the mine can be used to upgrade other mines and reduce future purchases.
Add the gold miner to your Watchlist if you're interested in receiving regular updates on its progress, then head over to the Agnico-Eagle Mines CAPS page and tell us if you think it can rise alongside the price of gold.
A growth tsunami
It's surprising analysts are expecting the solid-state drive maker STEC to fall precipitously this quarter, but if rivals Western Digital (NYSE: WDC ) and Seagate Technologies (Nasdaq: STX ) can benefit from the shortage of hard-disk drives caused by the floods, then the next-gen drive maker might see the rising tide lifting its own boat too.
Seagate was barely touched by the floods and naturally is raising the bar this year, but even Western Digital, which saw a 19% drop in revenues, enjoyed higher profits due to elevated pricing. I'm looking for STEC to surprise Wall Street as well. IHS iSuppli say HDD sales will fall 13% in the first quarter, followed by a 5% drop in the second. It won't be until the third quarter that they are expected to rebound. There won't be a pell-mell rush into SSDs, but with the shortage of HDDs and the value proposition of SSDs, increasingly look for STEC to enjoy the benefits from more enterprises taking up the next-gen technology.
Add STEC to the Fool's free portfolio tracker and see if it can ride out the expected storm.
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