5 Cold Stocks Heating Up

When a stock's share price is lower than a North Dakota thermometer in February, investors tend to give it the cold shoulder. But as the market warms to a stock's prospects, its price can heat up in a hurry. Alas, you can rarely tell that a stock is melting investors' hearts until after it's made that upward leap.

Taking the market's temperature
But Motley Fool CAPS' proprietary ratings, aggregated from the opinions and accuracy of 135,000-plus members, offer a great way to monitor investor sentiment. Following a CAPS rating trend can help us determine the best time to invest. Let's look at previously rated one- or two-star companies that have recently enjoyed a bump in investor confidence and see whether they're truly heating up -- or headed back to the deep freeze.

Source: Motley Fool CAPS.

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 pay attention, too.

The sun's always shining somewhere
International expansion is a key component of SciClone Pharmaceuticals, and with its addition to the Russell 3000, the growing biotech should benefit from a higher profile among U.S. investors.

SciClone is a U.S. company with commercial operations primarily in China. Its top product, Zadaxin, is sold in 30 markets around the world for treating hepatitis B and C viruses and certain cancers. However, it is not approved in the U.S. for hepatitis C. Shares suffered a setback last November, when Zadaxin failed to meet the main goal in a hepatitis C study. (Vertex Pharmaceuticals' (NASDAQ:VRTX) virus treatment, telaprevir, has analysts feeling far more hopeful.) First-quarter revenue soared by 42% on the strength of sales of Zadaxin in China. Shares, which started the year at literally just dimes apiece, have almost quadrupled since then.

CAPS member snowcake likes SciClone's pipeline, which includes candidates for melanoma and pancreatic cancer. "[Having some] experimental drugs in R and D that are very close to approval along with those already on the market makes this one a buy."

The 240 companies that make up the Biotechnology tag on CAPS have enjoyed some success over the past month. The grouping his risen by nearly 4%, enough to make it one of the top 30 tags in the CAPS universe in terms of performance over the past month. Yet SciClone Pharmaceuticals has done even better -- it has climbed by more than 35%.

Cytori Therapeutics has enjoyed a similar bounce after first-quarter results showed a narrower loss than a year ago. Among other things, its products, sold primarily in Europe and Asia, separate and concentrate adult stem and regenerative cells from human adipose tissue for reintroduction back into the patient. It was able to begin marketing those products early last year. As a result, while advertising spending rose, third-party revenues soared to $1.3 million from just $153,000 a year ago. CAPS member boyceh66 thinks Cytori is a long-term winner, once it's able to show benefits from its products.

[Cytori] has had problems gaining respect and revenues, but as a user and seller of many new technologies in a similar field within healthcare, I know people generally do not quickly adopt great new devices that are effective, since they have seen so many overhyped products in their lives. I believe [Cytori] is going to go much higher eventually, but it is not a short-term trade. Once they prove stem cells from adipose can not cause cancer after being implanted into patients, and they prove some of their claimed benefits in bigger studies, revenues will flow.

Geron (NASDAQ:GERN), for example, announced this week that its dendritic cells derived from human embryonic stem cells function similarly to natural dendritic cells from the bloodstream, a finding that positions them for use in various therapeutic areas.

Shine your starlight
So are these stocks driving ahead or ready to crash? It pays to start your research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. Then weigh in with your own thoughts on which stocks you think are 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?