Drink In These 5 Top Stocks

Whether in the corporate lunchroom, our cubicles, or the local watering hole after work, there are regular places we gather to discuss news, sports, or -- if you're like us -- stocks. Here at Motley Fool CAPS, we gather around the virtual water cooler daily to rate stocks and delve into their merits as investments.

Our 130,000-strong CAPS community -- where members give the thumbs-up or thumbs-down to some 5,300 stocks -- seeks out the businesses it thinks will outperform the market. Below we'll take a look at some of the highest-ranked, most talked-about stocks in the CAPS universe, and whether you think they'll continue their winning ways.

Stock

CAPS Rating (5 Stars Max)

No. of Calls

% Outperform Calls

LoopNet (Nasdaq: LOOP  )

****

1986

97%

MEMC Electronic Materials (NYSE: WFR  )

****

1843

97%

Phillip Morris International (NYSE: PM  )

*****

1832

98%

US Steel (NYSE: X  )

****

1859

94%

USG (NYSE: USG  )

****

1961

93%

A tall drink of water
Like country singer Billy Ray Cyrus's music, Phillip Morris International is a stock that everyone hates to admit they like. Investors just don't want to acknowledge they get an achy-breaky heart for a cigarette manufacturer.

Despite being a pariah here in the U.S., smoking is ascendant around the world, particularly in emerging markets, where Phillip Morris saw strong revenue growth in the first quarter of 2009. Latin America and Canada grew 28% over the year-ago period, excluding currency fluctuations, while Eastern Europe, the Middle East, and Africa saw 6% growth.

However, overall first-quarter sales were off 5.5%, and profit was down 12%, largely because of the volatility of the dollar. As order is restored to economies around the globe, currency stability will enable the cigarette maker to remain a smooth draw, fending off inroads from lower-priced-cigarette makers such as British American Tobacco (NYSE: BTI  ) . Absent the dollar's drama, sales actually rose 6.3%, and earnings per share jumped 12.7% from the year-ago period.

Compare that to Altria (NYSE: MO  ) and its domestic profit declines, and there's more than one parallel here to Billy Ray Cyrus: Both have offspring that are faring better on the world stage.

Even if you don't smoke, there's no reason you shouldn't enjoy the healthy dividend and growth potential that foreign markets hold for the cigarette maker. CAPS member jigar34 thinks Philip Morris' cash-generating capabilities will ensure that this one doesn't go up in smoke:

Like my other pick [Diageo], I like this one for the great brands it holds and its high dividend yield (5.7%). [Philip Morris] generates a lot of cash and the growth prospects are robust, expecially as the emerging markets turn to brand name smokes. The debt level makes me uneasy, but as long as the sales (and thus cashflow) are there, I expect debt payment and even potential for dividend increases and share repurchases.

Gather 'round
The CAPS community is like trying to take a sip from a fire hose. With so many good opinions about today's top companies, why not grab a pointy paper cup from the dispenser and join us at the Motley Fool CAPS water cooler. Your input can help guide other investors to stocks with bright prospects for growth. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page.

Sign up today for the completely free service, and let us hear what you have to say about the great and almost-great companies that interest you.

LoopNet is a pick of Motley Fool Rule Breakers and Motley Fool Hidden Gems. USG is a Motley Fool Inside Value selection. Diageo is a Motley Fool Income Investor selection. Try any of our Foolish newsletters services free for 30 days.

Fool contributor Rich Duprey owns shares of USG, but he does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.


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