Seeking stocks that others ignore, shun, or simply forget gives individual investors like you an edge over the professionals. Getting in before Wall Street discovers them -- or rediscovers them -- means you can stake a claim before they start taking off.
Here we check out companies with minimal analyst coverage at best, 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.
On the surface, copper and molybdenum miner Taseko Mines
Taseko Mines snapshot
|Market Cap||$626 million|
|Revenues, TTM||$254 million|
|1-Yr. Stock Return||(5.2%)|
|Return on Investment||1.7%|
|Est. 5-Yr EPS Growth||11.0%|
|Dividend & Yield||NA/NA|
But remember: Without much analyst support, you'll have to do more digging on your own to see whether it deserves a spot in your portfolio, so don't just buy or sell it based solely on its appearance here.
Hiding in plain sight
Relying upon industrial metals as Taseko does requires a belief in economic expansion. Lately, that's meant deferring hope until sometime in the future, as the U.S. economy is barely breathing, Europe is wracked with crisis, and China is skidding more sharply than anticipated.
Yet, with the Fed about to initiate another round of quantitative easing, Europe poised to engage in a huge round of bond buying to prop up the eurozone, and China having announced yet another massive stimulus spending program, world governments have kicked the can of fiscal responsibility further down the road, even as they bolster short-term prospects for gain.
In response, copper prices have surged to a four-month high of $8,100 a tonne. Also, molybdenum has remained fairly weak, but if China follows through on its plans, we should see prices rise, as it's a key commodity in the production of steel. Thompson Creek Metals
Taseko's dealt with a number of problems this year, not least of which were timing issues that delayed copper shipments early on. The miner also shut down of one of its mills, had difficult "ore characteristics" affecting results, and fickle weather that made mining a challenge. But, second-quarter copper concentrate production was up both sequentially and year over year, while molybdenum had poor recoveries that caused production to fall from the first quarter even as it was up from 2011.
Pricing will be the linchpin for copper miners Taseko, Freeport-McMoRan
On the molybdenum side, analysts think pricing could stabilize in the range of $14-$15 per pound, better than the $13 Freeport is modeling for the second half of the year. Rare-earth-metals miner Molycorp
At seven times earnings estimates Taseko seems cheap, and while its capex spending plan has eaten away at performance, it should pay off down the road. Just about a year ago I rated the miner to outperform the markets on Motley Fool CAPS, believing its turnaround was under way. While the stock has advanced18% since then, the broad indexes have done better thus far, rising 26% in the same time period.
I'm still confident Taseko Mines ultimately will prove the better, but let me know in the comments box below if you see a reason to think the copper and molybdenum miner won't be able to dig its way out of the hole it's in.
Swing for the fences
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