With the volatility and uncertainty in the markets over the past year, many investors have looked for safe haven in silver stocks and other precious metals. But I've found investments from another sector that are beating the pants off silver 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 more than 115,000 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 Silver tag pulls up a list of 20 stocks that have lost 67.5% in the past year.
But CAPS tags can also lead you to stocks that have done much better. One example: Coal. This group comprises 22 companies that have outperformed the returns of the broader market and the silver group with a 19.1% average loss 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 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 a company, and why.
For instance, here are a few of the stocks in the Silver group:
|
Company
|
CAPS Rating (out of 5)
|
1-Year Return
|
|
Southern Copper (NYSE: PCU )
|
*****
|
(73%)
|
|
Lundin Mining
|
*****
|
(87.2%)
|
|
Silver Wheaton (NYSE: SLW )
|
****
|
(66%)
|
|
Coeur d'Alene Mines (NYSE: CDE )
|
****
|
(65%)
|
Source: Motley Fool CAPS and Yahoo! Finance, as of Oct. 10.
Now, based on the interest in the CAPS community, here's a sampling of Coal stocks that investors may want to consider.
|
Company
|
CAPS Rating
|
1-Year Return
|
|
Peabody Energy (NYSE: BTU )
|
****
|
(40.6%)
|
|
Rio Tinto
|
****
|
(52.1%)
|
|
Walter Industries (NYSE: WLT )
|
***
|
16%
|
|
Cleveland-Cliffs (NYSE: CLF )
|
***
|
(39.8%)
|
Source: Motley Fool CAPS and Yahoo! Finance, as of Oct. 10.
Peabody Energy
Peabody Energy, the world's largest coal company, has made big moves to service demand for coal from the Pacific Rim Region, with its beefed-up Australia operations expected to hit full capacity in 2010. Although the commodities correction in recent months has sent mining equities like Peabody and Massey Energy (NYSE: MEE ) down, Peabody's contracts were negotiated in the spring, leaving little effect on near-term earnings. And the strengthened financial performance of its Australian operations even led Standard & Poor's to raise the credit rating of the firm.
Emerging markets are also becoming a bigger component of Peabody. With approximately 70% of China's electricity produced from coal, Peabody is tapping the huge opportunity there. The company has signed an agreement with Chinese officials for the development of a coal surface mining project and gasification facility that could potentially add 3 billion tons of coal reserves to its current 9 billion.
Despite commodity sell-offs recently, many CAPS members still see reasons to believe that coal has a bright future. Indeed, 96% of the 1,528 members rating Peabody Energy expect it to outperform the market.
Cleveland-Cliffs
Iron ore and metallurgical coal miner Cleveland-Cliffs has been digging deep lately, reporting an 84% increase in revenue year over year for the second quarter and a 211% jump in earnings for the same period. Its current product mix is 80% iron ore and 20% metallurgical coal, but several acquisitions done in the recent past and a big one proposed just recently will balance the company more evenly as half coal and half iron ore producer.
But the bid for coal competitor Alpha Natural Resources has sent its largest shareholder, Harbinger Capital Partners, scrambling to block the deal. The initial $10 billion cash and stock bid for ANR has dropped in value to $4 billion, as Cleveland's shares have lost a huge chunk of value since the bid was made. In an effort to steer the company away from the acquisition, Harbinger attempted to buy more shares of Cleveland, but the deal was shot down by shareholders.
If shareholders approve, the deal should close by year's end and the new company will produce an estimated $10 billion in revenue in 2009. In CAPS, members aren't unanimously bullish on Cleveland-Cliffs, but a solid majority -- 95% of the 894 rating the company -- expect it to outperform the market.
Before you buy ...
Of course, what's happened in the past is no indicator of where investors should be putting their capital now. But the underlying reasons behind dramatic run-ups in stocks or groups of stocks can clarify trends that may significantly affect investments. Just make sure to do your own due diligence rather than simply following crowds or individual recommendations.
In the coming weeks, Fool co-founder David Gardner and his Motley Fool Pro team will invest $1 million in a portfolio designed to help you make money in any market. The service, which just launched, will rely heavily on proprietary CAPS "community intelligence" data to establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds. To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.
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