5 All-Star Stocks

Win or lose, we all have an opinion on which stocks are rockets and which are dogs. If we could invest like Peter Lynch or Mohnish Pabrai, we'd probably have a lot more companies in our win column than on the loss side of the ledger. Warren Buffett began buying railroads last year, and just about any company that ran on tracks came into play.

So when top-notch investors back a stock, you might want to give it more consideration. Over on the investor-collaboration site Motley Fool CAPS, we can do just that. On CAPS, players who've earned a rating of 80 or better by consistently outperforming their peers are dubbed All-Stars. Sometimes, these ace investors will back a stock that others think is a dog. Considering the All-Stars' track records, we might want to look a little more closely at their selections.

Here are five companies that some investors have marked down but that still enjoy unanimous All-Star backing:

Of course, this isn't a list of stocks to buy and sell; instead, it should serve as a starting point for your own research and analysis.

Building communities
The housing industry in the U.S. has been flattened, but that doesn't mean it's that way elsewhere in the world. With a nascent middle class developing around its surging economy, China is finding that its inhabitants want quality places to live. Xinyuan Real Estate is a developer of large-scale residential communities in China that, like competitor China Housing & Land Development (NASDAQ:CHLN), has found demand increasing.

Xinyuan reported preliminary first-quarter results last month that saw contracted sales rise by 688% in the first quarter from the year-ago period. It sold more than 2,100 residential units this year, compared to just 297 units the previous year, and sales have grown to just more than 1 billion renminbi. Xinyuan points out that since it recognizes revenue under the percentage-of-completion method, revenue from contracted sales doesn't always translate into future sales. But it's a common enough measure among developers that have extensive capital outlays for projects, and it's an attempt by management to better represent the company's underlying economic activity.

Investors like it that Xinyuan is focusing on second-tier cities -- not China's largest cities, but its larger, more developed urban areas with above-average rates for gross domestic product and population growth. Yet as land values have risen, the government has imposed a new range of taxes and fees in an attempt to cool the economy. For example, the government will seize any plots that remain undeveloped for more than two years, and plots held for one to two years without development will be subject to a 20% tax.

Many homebuyers and developers like the proposals, because they will free up parcels from those who might be holding on in hopes of gaining additional profits from rising prices. Obviously, free-market economics has only partially taken root there.

CAPS investor TMayea believes Xinyuan is staking out a niche for itself in such second-tier cities.

[Xinyuan Real Estate] is a [Chinese] homebuilder carving a niche in the second tier cities. Gov wants citizens to move to 2nd tier cities and is providing infrastructure, and businesses, to these areas. The mortgage requirements are far different than the U.S. Xin is expanding to new cities monthly, and as the new middle class get richer, they want nice homes (not necessarily Mcmansions). Xin is well financed, and as the mortgage markets opens up should profit nicely.

Similarly, CAPS investor MGen finds the focus on second-tier locales a smart strategy that avoids the problems associated with trying to build in more urbanized first-tier cities.

[Xinyuan Real Estate] is well positioned to be a longterm success in the Chinese real estate market. Very high company financial growth with a stock that was unduly beaten down by both the declining overall stock market and from a one-time charge on [its] last earnings report. ... Concentrating upon the secondary Tier cities in China not only assures higher growth for [Xinyuan Real Estate], but also avoids the regulatory disadvantages and slower growth associated with the largest Tier 1 cities.

An all-star act
A few CAPS investors have bet against the house. What about you? Head over to Motley Fool CAPS, and let us know what you think about these and your other favorite investments. CAPS is completely free, and along with the other 1050,000 investors there, you may help uncover the next All-Star Stock.