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:
1. Underfollowed small-cap stocks offer great returns.
2. Wall Street is covering fewer stocks than ever before, making now a great time to start looking for mispriced small caps.
3. 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 Lowe's (NYSE: LOW ) and Target (NYSE: TGT ) have more than 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
|
Market Cap*
|
CAPS Users
|
Analysts
|
Analyst Rec
|
|
Cohu (Nasdaq: COHU )
|
$482
|
12
|
Four
|
Buy
|
|
EntreMed (Nasdaq: ENMD )
|
$153
|
17
|
One
|
Buy
|
|
HMS Holdings (Nasdaq: HMSY )
|
$275
|
28
|
Two
|
Buy
|
|
Hypercom (NYSE: HYC )
|
$361
|
37
|
Four
|
Buy
|
|
U.S. Global Investors (Nasdaq: GROW )
|
$250
|
126
|
Zero
|
N/A
|
*In millions.
**Analyst data from Thomson One
As always, these stocks are offered not as formal recommendations, but rather as ideas worth researching further. That said, if you're interested, I'm intrigued by HMS Holdings, which seems well-positioned in the growing health-care industry.
Want to learn more about these or any other undercovered small caps? Start by reading through what other investors have to say about them in CAPS. 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.
Hypercom used to be a Stock Advisor recommendation.
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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