Is Wall Street Wrong About These Stocks?

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?

Stock

CAPS Rating (out of 5)

No. of Analysts

Wall Street Bullish Sentiment

CAPS Bullish Sentiment

Ctrip.com (Nasdaq: CTRP  ) **** 13 69% 96%
Hudson City Bancorp (Nasdaq: HCBK  ) **** 9 56% 94%

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.

Leaving on a jet plane
When you compare how fast priceline.com (Nasdaq: PCLN  ) is growing to the rate of increase seen by Chinese travel planner Ctrip.com, investors in the latter probably heave a sigh of relief the U.S.-based OTA doesn't have a real presence in Asia. Priceline saw revenues soar 36% last quarter versus 18% at Ctrip.

As the Fool's Rick Munarriz notes, China was supposed to be the market that would make millionaires of investors, as the burgeoning middle class grew and companies like Ctrip that serviced it would thrive. But with the country's economy slowing down, I think we're witnessing what happens when expansion is based on massive intrusions by the government into the marketplace. Since the growth isn't organic, the results last about as long as cotton candy.

Priceline hasn't needed China to prosper, instead focusing on the rest of Asia and Europe. But that also means Ctrip faces the threat of Priceline turning its attention to China and Ctrip's home market at some point -- and taking share from Ctrip. I think that will happen eventually, so I'm siding with the bears on this one and marking Ctrip to underperform on CAPS.

That puts me in the distinct minority of almost 4,300 members who have weighed in on the stock, as only 169 agree with me. Add the Chinese travel agent to your Watchlist if you're interested in receiving regular updates on its progress, then head over to the Ctrip.com CAPS page and tell us whether you think it can gain altitude once again.

A house of cards
The low-interest-rate environment caused Hudson City Savings Bank to suffer an 18% decrease in net interest income and a 95% drop in non-interest income, causing net interest margins to fall because of faster mortgage prepayments. Yet Hudson City was able to cut its provision for loan losses by 44% in the quarter, meaning that despite its losses, it's looking healthier now.

My Foolish colleague Sean Williams likes Astoria Financial (NYSE: AF  ) as an investment because it reminds him of Hudson City with its long history of profitability. It was only recently that Hudson City started experiencing losses as the mortgage market was upended. That's why I'm joining with the CAPS members who've rated this bank to outperform going forward, where All-Stars are almost just as positive of its chances to beat the Street.

Add Hudson City to the Fool's free portfolio tracker and see whether it can generate renewed interest among investors.

What's wrong with that?
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Fool contributor Rich Duprey holds no position in any company mentioned. Click here to see his holdings and a short bio. The Motley Fool owns shares of Ctrip.com International. Motley Fool newsletter services have recommended buying shares of Ctrip.com International and priceline.com. 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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  • Report this Comment On March 18, 2012, at 7:39 PM, crca99 wrote:

    The author says, "But with the country's economy slowing down, I think we're witnessing what happens when expansion is based on massive intrusions by the government into the marketplace. Since the growth isn't organic, the results last about as long as cotton candy."

    I wish I knew the context of "expansion based on intrusions by government" or "growth isn't organic."

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