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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 fortunes change and the market warms to a stock's prospects, its price can heat up in a hurry. Unfortunately, it's hard 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 of 180,000-plus members, offer a great way to monitor Investor sentiment. Following a CAPS rating trend, we can find previously low-rated 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.
Obviously, such stocks are not ones you automatically buy; rather, they're 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.
Caution: Contents may be hot
Chip design testing house ChipMOS Technologies (Nasdaq: IMOS ) hasn't released its June figures yet, but it has suggested that quarterly sales will continue their march higher as orders for memory and small-size panel driver ICs are driven up another 10% to 12% sequentially. Coming as it does on the heels of an agreement extension with Spansion (Nasdaq: CODE ) for wafer sort services, ChipMOS may very well exceed analyst expectations.
ChipMOS, which counts the likes of Himax Technologies and Micron among its top customers, has been aggressively building out capacity throughout the early part of the year. At less than 4 times earnings estimates, the tester is looking pretty cheap since it supplies customers that supply Apple (Nasdaq: AAPL ) with small-screen LCDs. I've been expecting ChipMOS to beat the Street and have rated it to outperform the market on Motley Fool CAPS.
The CAPS community is starting to come around to that thinking, too, as its CAPS star rating bounces back. Tell me on the ChipMOS Technologies CAPS page or in the comments box below your views on whether a fall introduction of the latest, greatest Apple product will boost it higher, and then add the stock to your Watchlist to be alerted to events as they occur.
The next big thing
Ne'er-do-well biotech Keryx Biopharmaceuticals (Nasdaq: KERX ) isn't a stock you'd expect investors to start having hope in again so soon after its potential blockbuster drug perifosine went bust instead. The colorectal cancer treatment it was developing with Aeterna Zentaris failed to perform any better than a placebo, so it gave the drug back to its partner to develop it further for multiple myeloma and will instead receive some royalties if perifosine ends up going anywhere.
Where they're probably seeing hope is in Zerenex, Keryx's other drug in development, which it will now concentrate all of its efforts on. It's a therapy for patients with end-stage renal disease who suffer from elevated phosphate levels, and it's thought there's a greater likelihood for success here, though with a smaller addressable opportunity. I noted before, however, that success with a smaller market is preferable to failure with a bigger one.
Considering it's had some positive results in Japan with Zerenex, it may be something to build on. Keryx has been looking to improve upon Sanofi's (NYSE: SNY ) Renagel, and its Japanese partners want to file a marketing plan there later on this year.
CAPS member NHWeston102 sees Keryx as a buyout opportunity for someone, but while the biotech has enjoyed a slight boost in confidence among investors, the low two-star rating the members of CAPS community has assigned it suggests they still think there are better places for your money.
Weigh in yourself on the Keryx Biopharmaceuticals CAPS page, and then add its stock to the Fool's personalized -- and free -- stock-tracking service, where you can be alerted if it makes a go of it with Zerenex.
Checking the mercury
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