These Stocks Beat Canadian Stocks

With many mining and natural-resources companies concentrated in Canada, investors have made plenty of profits from this region as the demand for basic commodities continues to soar. But I've found investments from another sector that are beating the pants off Canadian stocks ... and I know where you can find out more about them.

Would the real hot stocks please come forward?
The 5,400 stocks that our 86,000-plus Motley Fool CAPS community members have rated include descriptive "tags" that group them with other companies sharing similar qualities -- a country of origin, a sector, or an end product, for example. Clicking the Canada tag pulls up a list of 50 stocks with an impressive average return of 23.4% in the past year.

But CAPS tags can lead you to stocks that have outpaced the returns from the Canada group: Exploration. These 54 companies have beaten the Canadian group by 6 points, with a 29.4% return in the past year.

Each group has its share of winners and losers, of course, but CAPS can be a great resource for zeroing in on potential opportunities in each area.

From macro to micro
You can sort tag 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.

For instance, here are a few of the stocks in the Canada group:

Now, here's a sampling of exploration stocks that investors may want to consider -- judging by interest in the CAPS community.

In the oil zone
There's quite a bit of overlap in our two sectors under comparison this week -- many exploration companies hail from the Great White North. But another area of North America -- namely, the grand state of Texas -- is home for many in the exploration industry as well. In fact, all three of the companies in our table this week are headquartered near Houston.

Sporting a market capitalization of a little more than $1 billion, small-cap explorer Grey Wolf is a small fish in the oil pool of land drillers. With plenty of players willing to drill for a fee, competition is fierce, and CEO Thomas Richards noted that industry efforts to bring new rigs online took a bite out of contract renewal rates at Grey Wolf and reduced rig utilization rates in 2007. But Grey Wolf prides itself on newer and technically superior rigs capable of tapping harder-to-reach reserves and will bring its rig count up to 123 later this year to meet customer needs.

CAPS investors bullish on Grey Wolf like the differentiation it holds on its drilling fleet; they believe Grey Wolf holds an advantage that positions it well against its peers as dayrates gyrate through supply and demand cycles. Tack on to this the general favor that investors still hold for any company connected to oil -- and a stock price recently lowered by 25% in the past nine months -- and you've got strong backing for Grey Wolf. Indeed, nearly 96% of the 701 investors rating the company believe it will beat the S&P.

Ups and downs
On top of benefiting from companies tied to natural resources, the Canada group has benefited tremendously from a double in Research In Motion this past year. But not every Canadian company has been putting green on the bottom line for the group, particularly in the case of network-equipment maker Nortel Networks.

Nortel stock has been in a tailspin lately, because of an ongoing restructuring that is still cutting the size of the company down to meet the market's demand for its products. Shares have fallen about 45% in the past month. Consequently, CAPS continues its bear march on Nortel, with 189 of the 539 investors who rate the company giving it a thumbs-down.

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 follow crowds or individual recommendations.