Wall Street enthusiasm for the companies we'll look at today is at best tepid yet our Motley Fool CAPS members would be to disagree. They've bestowed on these companies their top honors, signaling their belief that these names will outperform the market.
So who has it right? The professional class of analysts sitting in their paneled offices and smoking stogies, or a motley community of 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)
Wall Street Bullish Sentiment
CAPS Bullish Sentiment
|DragonWave (Nasdaq: DRWI )||****||33%||95%|
|Synovus Financial (NYSE: SNV )||****||57%||87%|
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.
The nanotech equivalent in mobile
I've previously noted that Alcatel-Lucent (NYSE: ALU ) has one of the best seats in the house when it comes to the next wave of deployment in small-cell technology to carry the heavy load that 4G long-term evolution mobile communications will place on the industry's infrastructure. It owns 20% of the LTE market, but it also holds 25 important mobile-operator commercial femtocell deployment agreements that will have its technology placed on telephone poles, the sides of buildings, and anyplace where it's otherwise difficult for tower coverage to reach.
Wireless backhaul operators like DragonWave and Ceragon Networks are retooling their microwave equipment to account for the coming onslaught of small-cell deployments. According to the market researchers at Infonetics, millimeter wave gear should grow at a compounded annual rate of 63% until 2016, and the growth of 3G and 4G small cell networks microwave backhaul will become the primary solution they use.
I see the coming explosion as creating opportunities for several players. Not only will industry stalwarts like Huawei and Ericsson continue to build on the foundation they've already established, but Ceragon and Dragonwave, too, will get their share. So I'm rating DragonWave to outperform the market indexes, but add the microwave-equipment specialist to your Watchlist and tell us on the DragonWave CAPS page whether you think there's a big opportunity in the space as the industry goes nano.
Take it to the bank
Smaller pay packages seem to be all the rage on Wall Street these days, as CEOs at Goldman Sachs, Morgan Stanley, and Bank of America (NYSE: BAC ) all see their compensation reduced amid diminished performance and greater scrutiny. I'm sure it's not out of a sense of propriety or modesty that they're doing this, as bankrupt MF Global still wants to richly reward some of its top executives, but sometimes the higher pay is worth it.
Two years ago, Synovus Financial was teetering on the brink and brought in a new CEO who has scrubbed the decks and made the regional bank financially ship-shape. He returned the bank to profitability by closing underperforming bank branches, cutting jobs, and raising capital. With large reductions in non-performing assets a concurrent decrease in net charge-offs, Synovus has been among the best-performing regional banks and has more than doubled off its 52-week lows.
So investors shouldn't be too upset that Synovus raised its CEO's total compensation by 66% to almost $1.5 million (that's a rounding error in Goldman's Lloyd Blankfein's pay package). While the bank still has to contend with weak -- but improving -- credit quality like Regions Financial (NYSE: RF ) and many other regional and national banking concerns, it seems there's good reason for investors to be hopeful it will continue building on its prior success.
Join me over on the Synovus Financial CAPS page, where I'm rating the stock to outperform, and deposit your thoughts on its chances, and then add it to the Fool's free portfolio tracker to see what happens when the Federal Reserve finally removes its boot from the throats of the regional banks.
What's wrong with that?
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