Think of investor sentiment as a pendulum that swings in tandem with a company's share price. When investors begin to think highly of your company, its stock might also start heading in the right direction. Alas, you can rarely tell when investors are warming to a stock until after it's made that upward swing.
An astrolabe for investors
But Motley Fool CAPS' proprietary ratings, aggregated from the opinions and accuracy of 78,000-plus investors, offer a great way to monitor investor sentiment. Like astronomers scanning the skies, investors can follow a stock's stars through its CAPS rating trend, tracking investor sentiment to help determine the best time to invest. Let's look at one- or two-star-rated companies that have recently enjoyed a bump in investor confidence, and see whether the stars are really aligning in their favor.
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Company
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CAPS Rating
|
Recent Price
|
1-Year Return
|
|
Ascent Solar Technologies (Nasdaq: ASTI )
|
***
|
$18.87
|
596.3%
|
|
Evergreen Solar (Nasdaq: ESLR )
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***
|
$15.63
|
96.6%
|
|
NovaGold Resources (AMEX: NG )
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***
|
$7.70
|
(52.7%)
|
|
SIGA Technologies (Nasdaq: SIGA )
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**
|
$3.31
|
(33.1%)
|
|
MDC Holdings (NYSE: MDC )
|
**
|
$38.01
|
(29.9%)
|
Obviously, this is not a list of stocks to buy -- just a starting point for further research. Still, consider Google (Nasdaq: GOOG ) , which had been trading near its 52-week highs when CAPS investors raised its rating back in October. At $616 a share, it might not have seemed cheap, but the search king has continued to appreciate in value, rising to almost $700 a share. That's a better-than-13% increase in value in just two months.
Dangling by a thread
Polysilicon is the blood surging through the veins of solar tech companies. Thanks to the great demand for this commodity, its price has doubled since 2005. Now, Evergreen Solar seems to have found a way to minimize the impact. Its proprietary ribbon-string technology uses about half the polysilicon of others in the industry, and now the company has signed a 10-year supply agreement as well. That potentially lucrative combination has begun to get investors' hearts pumping.
CAPS investor toozie acknowledges the benefit of Evergreen's minimalist approach to polysilicon, but thinks the company will soon have to ramp up production:
We'll see (we've been waiting a while on this one) -- their string ribbon process uses less Si, but if Si supplies ramp up, this will be less of a cost advantage. They've been slow to ramp production, but will likely continue to take the necessary steps to add production capacity.
The news last week that Evergreen indeed intends to expand production, from solar panels with 15 megawatts of annual generating capacity this year to more than 100 megawatts in 2009, and to 500 megawatts in 2012, ought to quicken a lot of pulses.
For the bears, though, solar tends to be viewed as simply the latest bubble fad that will soon burst. CAPS All-Star lovesaves thinks profits will be a long time coming: "Solar is an overbought sexy bubble. Many many years before we see these companies return profits, if ever."
Shine your starlight
Will Evergreen turn investors green with profits? We haven't yet heard from you, and at Motley Fool CAPS, every investor's opinion counts. Your voice could determine whether these stocks become shooting stars or supernovas. Since it's free to sign up and post your thoughts, why not use this opportunity to take your star turn?
For every post you make to CAPS or any Foolish discussion board in the month of December, The Motley Fool will donate $0.02 to charity. So give us your two cents and we'll pay it forward!
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