By
Tim Hanson
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More Articles
October 20, 2006
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We're back again this week to help you identify more promising small caps worthy of your investment dollars. Why do we do this? Because:
- Underfollowed small-cap stocks offer great returns.
- Wall Street is covering fewer stocks than ever before, making now a great time to start looking for mispriced small caps.
- Small caps can be dangerous when they're underfollowed, so we try to shed a little more light on the asset class for you.
Our methodology
Unlike in Motley Fool Hidden Gems, where our team of analysts uses bottom-up, fundamental analysis to ferret out small-cap recommendations, this column uses our brand new Motley Fool CAPS community intelligence database to turn up promising stocks. The system, which is still in beta testing, asks amateur and professional investors alike to rate stocks either "outperform" or "underperform." In turn, each investor is rated, as is each stock.
The end result is that while only huge companies such as IBM (NYSE: IBM ) and Seagate Technology (NYSE: STX ) have more than 15 or 20 analysts following them, CAPS harnesses the ideas of thousands to get at the long tail of the stock market with the same depth of coverage.
Drumroll, please ...
So, without further ado, here are five five-star CAPS stocks that four or fewer professional analysts are covering.
|
Company
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Market Cap (mm)
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CAPS
Users
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Analysts
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Current Analyst Rec.
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ICO (Nasdaq: ICOC )
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$182
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45
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1
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Strong Buy
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INVESTools (Nasdaq: IEDU )
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$527
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26
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4
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Buy
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Mueller Industries (NYSE: MLI )
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$1,400
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18
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1
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Buy
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Natco (NYSE: NTG )
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$565
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19
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4
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Buy
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New Frontier Media (Nasdaq: NOOF )
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$210
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23
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4
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Buy
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*Data from Thomson Financial.
As always, these stocks are offered not as formal recommendations, but rather as ideas worth researching further. That said, if you're interested, I met Natco's management team last spring when the stock was around $30, and they seemed to think their company was undervalued then.
Interested? If you'd like to learn more about these stocks or offer your own insights on them or any other stock, CAPS is a great place to start. Just click here to join the free beta test today. And if you're interested in vetted small cap recommendations, we also offer Hidden Gems.
Tim Hanson does not own shares of any company mentioned. The Fool's disclosure policy pities the fool who doesn't have a disclosure policy of his own.
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