5 CAPS Favorites Overlooked by Wall Street

Between the concerted opinion of Wall Street analysts and the collective wisdom of investors at Motley Fool CAPS, I'll happily choose the advice of Fools.

With all this market turmoil affecting equities across virtually every sector, the list of quality companies trading well below their 52-week highs has grown far too long to be of use by itself. Traditionally, investors might look to Wall Street analysts for shelter from a stormy market. With the help of CAPS, however, individual investors are increasingly striking out on their own and finding there is valuable strength in numbers.

To whittle down the list of battered stocks to find diamonds in the rough, I used the stock screener on CAPS to uncover several favorite picks of CAPS members that have been largely overlooked by the pros on the street. I used the following search criteria:

  • A minimum four-star CAPS rating (out of a possible five)
  • At least 1,000 outperform picks from CAPS members
  • At least 200 outperform picks from CAPS All-Stars
  • Stocks currently trading at least 50% below its 52-week high
  • Currently rated by no more than two of the Wall Street analysts tracked by CAPS

Below is a selection of the companies I uncovered:

Company

Recent Price

CAPS Outperforms

All-Star Outperforms

CAPS Rating

% Below 52-week High

 

Aluminum Corporation of China (NYSE: ACH  )

$23.04

3,252

858

*****

(75.52%)

OYO Geospace

(Nasdaq: OYOG  )

$51.95

1,360

487

*****

(54.46%)

Northgate Minerals

(AMEX: NXG  )

$1.61

1,410

361

****

(54.72%)

Taseko Mines

(AMEX: TGB  )

$3.08

1,227

244

*****

(54.37%)

Tata Motors

(NYSE: TTM  )

$9.79

2,181

593

*****

(54.13%)

Data from Motley Fool CAPS and Yahoo! Finance as of Aug. 28, 2008.

I've highlighted both Aluminum Corporation of China (Chalco) and Taseko Mines elsewhere, so let's look a little deeper into gold miner Northgate Minerals and Indian automaker Tata Motors.

Opening the gate for gold
It's been a rocky road to the gold for mid-tier miner Northgate Minerals. With its flagship Kemess South mine expected to close after 2010, and the Kemess North project denied the necessary permits to proceed with development, the company looked west to Australia and picked up two producing gold mines. In the early going, cash costs have been higher than anticipated at the Australian operations, but management views this as a purely temporary snag. Thanks to a strong copper by-product at Kemess South, Northgate still managed an overall cash cost per ounce of gold of $423 in the second quarter of 2008, which is in the ballpark with results from many strong competitors like Kinross Gold (NYSE: KGC  ) .

Many CAPS members, myself included, saw deep value in Northgate's shares even when they traded well above today's levels. Member anon726 explained his rationale back in October 2007:

The panel proposal to reject Kemess North was big hit for [Northgate]. However, they have a lot of cash and very good management. They are constantly looking for low performing mines where they can utilize these two assets. In Young-Davidson the probable and proven reserves are increasing all the time, when they make more mining. So even without Kemess North I think with current pricing [Northgate] is a value play.

Even cars are going Nano
As American icons General Motors (NYSE: GM  ) and Ford languish in losses and look to Congress for $50 billion in relief, halfway around the world, Tata Motors appears poised to benefit from the emergence of a burgeoning middle class in India and beyond. With a $2,500 price tag and excellent fuel efficiency, the rollout of Tata's tiny Nano strikes this Fool as an impeccable bit of timing. CAPS member imphasing summed it up this way:

Tata Motors may have some debt after acquiring Land Rover and Jaguar, but there is massive potential for growth for this company. With the new Nano coming out soon, availing a car to the rising middle class of India, they have a massive market at their disposal. I'm calling for this to grow at least 15% over the S&P over the next year, and after that. This is a long term stock [...] Buy and hold, buy and hold.

I agree. Although the company is concerned about potential competition in India from Chinese manufacturers, if all the buzz about the Nano is well-deserved, I think the little car could see some big sales.

Now that you know what everyone else thinks about these stocks, we'd like to know what you think. Dig your way into Motley Fool CAPS and share your perspective today.

Further Foolishness:

Tata Motors is a Global Gains pick. OYO Geospace is a Motley Fool Hidden Gems recommendation. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Christopher Barker captains yachts and writes about stocks. He can also be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He owns shares of Aluminum Corporation of China, Northgate Minerals, Kinross Gold, and Taseko Mines. The Motley Fool has a disclosure policy.


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