Successful investing requires you to think independently and stick to your convictions. That's hard enough with stocks that are generally popular -- after all, in the stock market, there's a seller for every buyer. But it gets even tougher with stocks that can't seem to find good press or bullish investors anywhere. Of course, defying popular opinion has led many contrarian investors to great returns.
In that spirit, I've headed to Motley Fool CAPS to dig up some unloved stocks that have delivered big gains to shareholders over the past month. Our community of investors gave each of these companies the lowest possible one-star rating just 30 days ago:
|
Stock |
30-Day Return |
One-Year Return |
Current CAPS Rating (5 max) |
|---|---|---|---|
|
Rigel Pharmaceuticals |
201.3% |
114.8% |
* |
|
Capstone Turbine |
35.2% |
58.7% |
** |
|
Pharmion |
9.4% |
142.2% |
* |
|
Doral Financial |
8.6% |
(56.9%) |
* |
|
MGP Ingredients |
7.6% |
(57.4%) |
* |
|
Planar Systems |
7.5% |
(27.4%) |
* |
|
Global Cash Access Holdings |
6.8% |
(64%) |
* |
Now, given CAPS' knack for accurately gauging winners and losers, I'm not recommending that you run out and buy these stocks! An index set up to short CAPS' least-liked stocks has outperformed more than 99% of all other CAPS players. That said, CAPS players have proved overly negative on high-performing stocks such as Crocs and DryShips. Are any of the stocks in the table above the same sort of undercover rockets?
Do research? You're kidding!
That's right. The best way to figure out whether any of these stocks is worth considering for your portfolio (real or in CAPS) is to roll up those sleeves and dig in a bit. We're looking for stocks that have good fundamentals despite their lack of popularity -- a profitable business, good management, and some decent growth prospects.
So how about this group? Biotech stocks are notorious for providing big, fast returns, but then crashing just as quickly. Some good phase 2 data helped Rigel skyrocket, but CAPS players aren't convinced it's worth the hoopla. And though Capstone Turbine has jumped up to two stars, many of CAPS' top players are still very skeptical about its future.
But what about Global Cash Access? This is a neat company that has entrenched itself in a great niche in the casino gaming market -- cash access. GCA's products allow gamblers to get their hands on cash through a variety of methods inside the casinos. The largest chunk of GCA's revenue comes from gamers pulling out cash advances on their credit cards (no surprise there!), followed closely by ATM withdrawals. The company also offers check verification and warranty for casinos that cash checks. A smaller part of the business is selling the information that it collects on players' credit and cash-access histories.
GCA's stock has been battered this year, most recently by an internal investigation that the company conducted over fraud allegations. On Nov. 14, the company announced that it would delay its 10-Q filing because of the investigation, the nature of which was undisclosed. The investigation concluded in late December without uncovering anything fraudulent, yet the stock doesn't seem to have its sea legs back quite yet.
On a forward basis, the stock currently trades at less than nine times expected earnings. Yet the company continues to sign new deals that are opening up markets in South Africa and Macau, which should help it continue to grow at a healthy clip. Remember, as CAPS player Streetkill points out, when it comes to gaming, "the house is the best bet."
So what's your take on GCA? Head over to CAPS, and let the community of more than 80,000 Fools know what you think. While you're there, you can start your research on the stocks we've mentioned here, or any of the other 5,300-plus stocks on CAPS.
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