Seeking stocks that others ignore, shun, or simply forget gives individual investors like you an edge over the professionals. Getting in before Wall Street discovers them -- or rediscovers them -- means you can stake a claim before they start taking off.
Here we check out companies with minimal analyst coverage at best, then pair our list with the opinions of the Motley Fool CAPS community. A stock that garners CAPS' top ratings but hasn't yet caught analysts' attention could be your next home run investment.
(out of 5)
Wall St. Picks
Wall St. Bullish Sentiment
Est. EPS Growth Next Year
|Fusion-io (NYSE: FIO )
|YM BioSciences (NYSE: YMI )
Source: Motley Fool CAPS.
Remember, without much analyst support, you'll have to do more digging on your own to see whether these stocks deserve a spot in your portfolio, so don't just buy or sell them based solely on their appearance here.
Hiding in plain sight
Despite a flawed IPO, Facebook remains a compelling company even if its stock right now at $26 a share is still too overpriced. There remain new markets and opportunities to conquer, and a growing user base suggests the slowing revenues that were hidden from the markets before it went public may just be a temporary situation. There's great need for more capacity, and that's why Facebook has turned to Fusion-io to go beyond just improving server utilization and is using its technology for data storage.
Similarly, Fusion-io was able to beat out Oracle (Nasdaq: ORCL ) for network storage to bolster Apple's (Nasdaq: AAPL ) iCloud service, providing perhaps its best opportunity for growth for the future. It seems to have a rather potent combination of data-delivery efficiency and expanding storage capacity that may soon overshadow its original functionality.
CAPS member chicagoadvisor likes how the prospects look at the moment, particularly since it's flying under the radar: "I'm excited about their software and the fact that their presence is growing in the cloud space. It's still a good story as earning haven't really shown up."
Let us know your views of its expanding business opportunities on the Fusion-io CAPS page and add the virtualization specialist to the Fool's free, personalized stock-tracking service to see whether it can add even more functionality to its footprint.
Stuck in the doldrums
Investing in drug development up-and-comer YM BioSciences could be a smart move as long as you're not expecting blockbuster growth. Although its JAK1 and JAK2 Inhibitor CYT387, a once-a-day treatment for myelofibrosis, shows a lot of promise in early- and mid-stage trials, there's not much of a market for the therapy to make it a breakaway drug. According to YM's estimates, there are between 75,000 and 83,000 primary and secondary instances globally for which there is a market opportunity to exploit.
Much has been made of the existing Jakafi therapy from Incyte (Nasdaq: INCY ) , and while YM's once-a-day regimen is better than the twice-daily from its rival, it appears a limiting environment, particularly if all the patients for which CYT387 is intended don't make use of it. With two other drugs in its pipeline not really getting any attention, its real essence is its JAK inhibitor, which, while promising, doesn't appear capable of taking YM very far.
The stock has nearly doubled from its lows even though it's been cut almost in half from its highs. I'm not seeing much else to propel it forward for the long haul, and I've already rated it to underperform the market indexes on CAPS, where I'm pretty much alone in the belief. Of the 168 members that have weighed in on YM, just four of us see it losing to the Street.
So let us know on the YM BioSciences CAPS page if you agree and add it to your watchlist to be alerted if any changes to its potential come forward.
Swing for the fences
Global unrest might just lead to soaring energy prices. Read The Motley Fool's special free report on "3 Stocks for $100 Oil" and the three companies poised to profit from the world's insatiable thirst for energy. To find out which stocks our top analysts picked as the best of the best, download this report now, but hurry because it's free for a limited time only.