Stocks on the Road to Greatness

For every stock out there screaming "Buy me!" others simply give us a nod and a wink. While all the attention might be focused on their five-star peers, we can sift through Motley Fool CAPS to find four-star stocks giving us the thumbs-up they're approaching greatness. 

These opportunities -- including familiar names and beaten-down companies -- rank higher than most of the other 5,400 starred companies, and it pays to investigate their potential. For consideration today, I've got a pair of stocks on their way to fame and glory.

Company

Market Cap

1-Yr. Rev. Growth

1-Yr. EPS Growth

1-Yr. Stock Return

Cerus (Nasdaq: CERS  ) $171 million 28.5% 0.0% 10%
GT Advanced Technologies (Nasdaq: GTAT  ) $1.1 billion 65.2% 100.3% (16%)

Source: Motley Fool CAPS.

As the 180,000-plus CAPS members have chosen these two companies as less-obvious sources for tomorrow's great buys, let's see why they might merit your attention.

Seeing red
Considering the signs were there to see, it's enough to make your blood boil if you missed out on the 85% rise in value of Cerus, a blood-transfusion safety-systems maker.

Developed in collaboration with Baxter International (NYSE: BAX  ) , the Intercept Blood System causes pathogens in the blood -- bacteria, parasites, and viruses -- to become inactive during transfusions. It's used in countries all across Europe, but not in the U.S., where the FDA has held up trials based on a variety of concerns. Yet the Intercept system recently inked a two-year supply agreement with France's national blood service as well as with Russia's federal biological agency.

It would still be a long road for Cerus if the FDA ever came around to giving it the nod. The biotech admits Intercept isn't manufactured in an FDA-approved facility, which obviously would be required. But it would also find itself pitted against Novartis's (NYSE: NVS  ) blood-screening system, which examines 80% of the donated blood supply in the U.S.

Cerus, though, says Intercept is more efficient because it's easier to simply inactivate all the pathogens than to screen for specific ones.

Highly rated CAPS All-Star zzlangerhans remains worries about Cerus running out of money before it achieves the success it's looking for, but you can let us know in the comments section below if you agree. Add Cerus to your Watchlist to get updates on its progress.

Advancing to the rear
Backlog doesn't translate into sales on a 1:1 basis, but the $1.1 billion in backlog GT Advanced Technologies reported for its polysilicon equipment is apparently giving investors encouragement that a good portion of the orders will be filled.

Global-grid-connected solar system installations more than doubled in 2011 to 27.7 gigawatts, according to the European Photovoltaic Industry Association. But with tariff changes that were scheduled to be implemented at year's end, that undoubtedly pulled a lot of orders forward. While it might spill over into the first quarter of the year, the current European financial crisis coupled with significantly reduced subsidies to the industry makes for an uncertain future.

Still, with giant wafer maker LDK Solar (NYSE: LDK  ) and others bringing even more polysi capacity online next year, I expect prices will be driven down even more, as the industry is awash in polysilicon. For that reason I'm still bearish on much of the solar industry and have marked GT to underperform the market over the next few years. That may hurt me in the near term as some of the backlog goes through, but I see darker days for the industry beyond the next quarter or two.

CAPS member JoeAgresti would disagree, noting that even during the severe industry downturn, orders weren't cancelled.

Grid parity is coming and GTAT is the company leading the charge. They have a significant backlog of orders that haven't been cancelled during the worst of times and they are growing their new sapphire business. If this industry weren't trading at such depressed valuations GTAT would be trading above $20 per share at the MINIMUM.

Add GT Advanced Technologies to the Fool's free portfolio tracker to be notified if the supply glut ultimately burns the equipment maker or its customers come through with the cash.

A great opportunity for you
Investor sentiment suggests these four-star investments still seem to be on their way to five-star greatness, but if you're looking for just one energy stock to play in 2012, click here to read The Motley Fool's free report, "The Only Energy Stock You'll Ever Need." But do it today, because, like low energy prices, it won't be around for long.

Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of Novartis. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


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