Unloved Stocks Ready to Shine

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 110,000-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 and track 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.

Sources: Motley Fool CAPS, Yahoo! Finance.

Obviously, this is not a list of stocks to buy -- just a starting point for further research. Yet if some of the best investing minds are taking notice of these stocks, maybe we should, too.

What a gas!
Independent natural-gas exploration and production company NGAS Resources focuses on unconventional basins in the eastern region of the United States. Drilling shallow wells primarily in the Devonian shale formation, NGAS needs to enhance the natural fracturing of the shale to extract the gas -- an unconventional means of production. While natural-gas prices have been mixed lately, dropping on gas from the Gulf of Mexico and rising in the northeast, they remain generally elevated above historical levels for this time of year.

All-Star CAPS investor JJ2000426 believed last November that NGAS was one of the best players in the industry:

NGAS is one of the best natural gas players. Natural gas will be bullish in the next several months or years as it catches up with oil. In the past history NGAS exhibited extremely volatile gains in very brief periods. In 1999 it gained 10 folds within a window of only 41 days.

More gas pains
As the wisdom of using food stock to create fuel has come into question, the same rationale doesn't extend to the use of cellulosic ethanol, which is made from plant wastes, corn husks, sugar cane, straw, and other cellulosic biomass feedstocks. DuPont (NYSE:DD) has recently announced its entrance into the field, and Verenium is launching a demonstration-scale plant to showcase its feasibility, as well as its proprietary specialty enzymes.

Getting the ball rolling in this field is attracting investors such as Masterofdabull, who admits that even though it's early in the game, this stock may be one to hold onto if demand rises for alternatives of this sort:

Verenium Corp. is starting up a research ethanol plant that runs on agricultural waste and wood products (cellulose) instead of corn. Great technology and great opportunity if you can hold on for the demand. I believe this is a gem in the rough. Too soon to buy, maybe but with oil going higher, who knows.

Shine your starlight
So are we looking at growing pains or gas pains here? 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?