Booming growth in emerging nations such as China and India has led to huge demands for commodities such as coal, copper, and zinc -- translating into big profits for investors. But investments from another sector are beating the pants off stocks focused on metals and minerals ... and I know where you can find out more about them.
Would the real hot stocks please come forward?
The 5,300 stocks that our Motley Fool CAPS community members have rated include "tags" that group them with companies sharing similar qualities -- a country of origin, a sector, or an end product, for example. Clicking the industrial metals and minerals tag pulls up a list of 59 stocks that collectively have risen more than 20% in the past year.
But CAPS tags can also lead you to a group of stocks that have outpaced even the market-beating returns of stocks in the industrial metals and minerals group: farm products. The 14 companies under this tag have averaged an even more impressive 38.7% return in the past year.
Each group has its share of winners and losers, of course, but CAPS is a rich resource for zeroing in on opportunities in each area.
From macro to micro
You can sort tagged groups by their CAPS ratings, from one to a maximum five stars, and then see which players -- from Wall Street to Main Street -- are bullish or bearish on the company, and why.
Here are a few of the stocks in industrial metals and minerals:
|
Company
|
CAPS Rating
|
1-Year Performance
|
|
Lundin Mining (:LMC)
|
*****
|
(37%)
|
|
Titanium Metals (NYSE:TIE)
|
*****
|
(31%)
|
|
Peabody Energy (NYSE:BTU)
|
*****
|
27%
|
|
Headwaters (NYSE:HW)
|
****
|
(55%)
|
Sources: Google Finance and Motley Fool CAPS, as of Jan. 24.
Now, here's a sample of farm products stocks that -- judging by interest in the CAPS community -- investors may want to consider.
|
Company
|
CAPS Rating
|
1-Year Performance
|
|
Cresud (:CRESY)
|
*****
|
0.5%
|
|
Calavo Growers
|
*****
|
81%
|
|
Cal-Maine Foods (NASDAQ:CALM)
|
****
|
121%
|
|
Chiquita Brands (NYSE:CQB)
|
****
|
13%
|
Sources: Google Finance and Motley Fool CAPS, as of Jan. 24.
Putting bananas in your pocket
I can hear the party conversation now: "My secret for beating the market last year? Bananas, lots of bananas."
Fresh-fruit seller Chiquita Brands is about as far from the glam stocks as you can get. Apple could be the fruit of choice for investors, but Chiquita's yellowed and elongated cousin hasn't fared poorly this year. But some bruises are just under the surface -- Chiquita emerged from Chapter 11 bankruptcy in 2002 and was required to pay a $25 million fine last year for paying off Colombian groups designated by the U.S. as terrorist organizations.
These blemishes have caused some investors to turn their noses up, although a solid contingent of CAPS investors contend that the stock is oversold on the bad news and doesn't price in the growth potential. Of the 149 investors rating the company, 123 think Chiquita will beat the market going forward.
Robbing the henhouse
If you were amused at the idea of telling your friends and family your fortune is tied to bananas, try explaining that your nest egg is wrapped up in Cal-Maine Foods, the largest shell egg producer and distributor in the United States. But a stock that has more than doubled in the past year is no laughing matter.
Shares of Cal-Maine have been surging lately with increased profits from operations. The market for eggs is quite volatile because of fluctuating feed and egg prices, but experienced management at Cal-Maine has successfully navigated feed corn prices that are soaring (thanks to demand for ethanol) and still increase sales. In its latest quarter, revenue surged 62% and net income more than quintupled to $40.2 million as egg prices reached record levels. The company also credited strong export markets for the solid results, a trend it sees continuing in 2008.
Feed prices are projected to remain high, but the company says the market for eggs both domestically and internationally will overcome the cost pressures and enable profitable operations. A group of 224 of the 234 CAPS investors rating Cal-Maine agree, and have voted for the company to outperform the S&P in the future.
Before you buy ...
Of course, investors shouldn't look in the rearview mirror to see where they should be investing now. But the underlying reasons behind dramatic run-ups in stocks or groups of stocks can clarify macroeconomic trends that may significantly affect investments. Just make sure to do your own due diligence rather than following crowds or individual recommendations.
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