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These Stocks Beat Gas Stocks

By Dave Mock April 10, 2008 Comments (0)

1 Recommendation

The "Big Oil" executives testifying before Congress aren't the only ones who have profited from the insatiable global demand for petroleum products -- investors have made plenty of green in gas stocks as well. But I've found investments from another sector that are beating the pants off gas stocks -- and I know where you can find out more about them.

Would the real hot stocks please come forward?
The 5,500 stocks that more than 96,000 Motley Fool CAPS community members have rated include descriptive "tags" that group them with other companies sharing similar qualities -- a country of origin, a sector, or an end product, for example. Clicking the Gas tag pulls up a list of 88 stocks that have hammered the market averages with a return of 27% in the past year.

But CAPS tags can lead you to stocks that have even outpaced the returns from the gas group: Agricultural Chemicals. This group comprises 20 companies that have soundly blown away the returns of the gas group with an amazing 96.8% average gain in the past year.

Each group has its share of winners and losers, of course, but CAPS can be a great resource for zeroing in on potential opportunities in each area.

From macro to micro
You can sort tag groups by their CAPS ratings, from one to a maximum five stars, and then see which players -- from Wall Street to Main Street -- are bullish or bearish on a company, and why.

For instance, here are a few of the stocks in the gas group:

Company

CAPS Rating (out of 5)

1-Year Performance

Devon Energy (NYSE: DVN)

*****

54%

Occidental Petroleum (NYSE: OXY)

*****

59%

Apache (NYSE: APA)

*****

85%

Total SA

*****

13%

Sources: Google Finance and Motley Fool CAPS, as of April 9.

Now, based on the interest in the CAPS community, here's a sampling of agricultural chemical stocks that investors may want to consider.

Company

CAPS Rating

1-Year Performance

Monsanto (NYSE: MON)

****

106%

Potash (NYSE: POT)

****

212%

Mosaic (NYSE: MOS)

****

312%

Agrium (NYSE: AGU)

*****

73%

Sources: Google Finance and Motley Fool CAPS, as of April 9.

Growing like a weed
I'd venture a bet that on a day-to-day basis, most investors aren't concerned with optimizing the milk output of cows -- considering many of us aren't even living in areas zoned for agriculture. But improving dairy cows' productivity -- as well as maximizing the yield of crops -- is a big deal to millions of farmers around the world. Monsanto spends a lot of time thinking about cows and ways it can improve its agriculture and genomics products.

Thanks to increasing demand for crop seeds and its herbicide product Roundup, Monsanto's sales have more than doubled over the past five years. And just as Monsanto aims to make farmers more efficient at producing sellable crops with fewer resources, the company has been increasing margins across the board as well. The combination of top- and bottom-line growth has fueled a more than 1,380% rise in shares in the past five years.

The tremendous growth at Monsanto has come with the backdrop of significant controversy over its business ethics, however; many activists have been quite vocal about the company's questionable advances in genetically modified products. Still, blazing this new trail in methods to improve crop yields has earned Monsanto plenty of bullish investors, because nearly 95% of the 1,644 CAPS investors rating the company believe it will continue to beat the S&P.

Before you buy ...
Of course, what's happened in the past is no indicator of where investors should be putting their capital now. But the underlying reasons behind dramatic run-ups in stocks or groups of stocks can clarify trends that may significantly affect investments. Just make sure to do your own due diligence rather than simply following crowds or individual recommendations.

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