Finding Stocks at a Fever Pitch

The collective power of thousands of investing minds is the driving force behind Motley Fool CAPS, the leading investor-intelligence community. Membership has grown to more than 105,000 investors, consisting of professionals, novices, and every level in between.

One of the service's unique features is the ability to not only rate a company on whether you think it will outperform or underperform the market, but also to express why you think it will, in as much or as little detail as you want. These analyses, or "pitches," can be as simple as saying "This stock has a low price-to-earnings ratio," or as complicated as a mulitpage, footnoted thesis. In the context of the overall assessment of the stock, a pitch is another data point to consider.

Throwing strikes
The useful analyses give salient details about a company and its prospects -- on both the bull and bear side -- and the best ones earn recommendations. We call the investors who merit the most recommendations for their analyses our "pitch-writing superstars." Let's look at these top investors and some of their best recommendations, so we can get a sense of what makes up strong analysis and winning investing.

Gtrinvestor is not only a top pitcher who's received more than 820 recommendations for his pitches, he's also a top-rated All-Star, with a 99.95 player rating. Here are a few of his most recent stock picks.

Source: Motley Fool CAPS. Score is by how many percentage points a pick is beating (lagging) the S&P 500 index since the call. Data as of 5/21/08.

A shocking pitch
Having made this pitch just the other day, this player has received only one recommendation so far, but the analysis on Rule Breakers recommendation TASER still shines through:

This company's stock price seems to go up and down based upon the latest gunshot fatality or [TASER] fatality (respectively). Right now, it is down on the latter. Realistically, even though the [TASER] may have some [serious] side effects to a small portion of the people it is used upon, I'm guessing that these side effects have a lower fatality rate than a bullet in the chest? Seriously though, this company actually makes money, increases sales, and is just now going to ... have their product carried in Sports Authority stores.

TASER, despite falling short of analyst expectations still managed to turn in a decent earnings report last month. Revenue rose by nearly 50%, earnings doubled, and the business began generating free cash flow again. The stock is some 60% below the highs it reached last October, and the report didn't give it any juice, either. That's led some CAPS investors to think there will be short-term pressure to the downside. Says BadBoysDriveAudi:

Short term momentum short. There isn't much on the horizon financially or strategically to worry about, so this is an easy short. In terms of this game, it's even easier -- I just need this ticker to underperform the S&P, which if people haven't noticed, has been quietly gaining in the past few weeks.

Inside pitches
Just because a top-rated All-Star investor writes a top recommended pitch for a company, that's no cause to go out and buy or sell that stock. You still need to perform your own due diligence. But it's worth considering what those All-Stars have said as you make your decision.

A Foolish stance
Step up to the batter's box of Motley Fool CAPS, and make your opinions known. Since CAPS is a completely free service, throw as many pitches as you like at the stocks of your choice. You'll be helping your fellow investors to make better investing decisions.