Investing in Your Backyard: Central Florida

Break out the deep-fried gator tail and a few margaritas -- it's a backyard investing barbecue in central Florida!

There are many good reasons for researching investment opportunities in a certain geographic area. Today, it's the midsection of the Sunshine State, coast to coast. Start in artsy Sarasota and go up I-75 to tourist trap Clearwater Beach. Cut through the hustle and bustle of downtown Tampa, and head east on I-4 through Lakeland. On the way to Daytona Beach, you'll pass Cinderella's castle in Orlando. Yes, there's a lot of tourism across the state, but also plenty of more traditional business.

If you happen to live in Ybor City or Winter Park, you already have a few advantages when it comes to evaluating the local market, such as access to local news sources and the word on the street, and a high probability of being a customer or employee of these companies. And if you're not a local resident, you might still want to know whether the weather matches the business climate -- a hot area could be chock-full of undiscovered treasures on their way to greatness.

Without further ado, here are the largest companies headquartered between Cape Canaveral and Indian Shores:

The top three market caps fall out in a very egalitarian manner, spanning the state. To begin with, microwave communications specialist and major U.S. military contractor Harris is headquartered in Melbourne, only a few miles from the rocket launch pads of Cape Canaveral.

CAPS player bformato is keeping an eye on this stock: "Assured Communications in the government, military and private sector. Aiding in the shift to HD TV and HD radio. This company will grow both organically and via acquisition. One to watch!" And plenty of players agree -- Harris has been a five-star CAPS stock for a solid couple of months now.

Darden, the parent company of household names like Olive Garden, Red Lobster, and Smokey Bones, calls Orlando home. Unlike Harris, it's a near-perennial one-star stock. All-Star player jmacn22 voiced some concerns back in August, and they still ring true today: "Smokey Bones and Bahama Breeze are weighing down Darden's overall performance and this is expected to continue into the near future as management puts together a new strategy to unlock value out of Smokey Bones... like scrapping the BBQ concept altogether for a more Texas steakhouse type. Until it can get these younger concepts in order I don't expect market-beating performance from this stock."

Electronic manufacturing maven Jabil hangs out in my backyard, just half an hour south of my northerly Tampa Bay suburb. Gtrinvestor holds much respect for this company: "Jabil is one of the most effective and efficient contract manufacturers out there. They continually post positive net income (which is more than most in this field can say), and management knows how to diversify their business in an effective way."

Dig deeper
OK, so I've mostly avoided the big white elephant in the room. Walt Disney (NYSE:DIS) may not have its headquarters in Orlando -- it's clear across the continent in Burbank, Calif. -- but Disney World and its attendant tourist industry remains the lifeblood of the Orlando economy. Bob Iger may have been dealt a lousy hand in the studio entertainment segment, but Disney World was and is a top-notch property.

Below the largest players, you'll find some other treasures under the Florida sun. The 70 local companies traded on one of the major exchanges include six five-star CAPS stocks, but also 10 one-star ratings. Tread carefully, Fool.

Three companies are current recommendations of our Foolish newsletters (and one is a former pick), including Tampa-based Motley Fool Hidden Gems selection Walter Industries (NYSE:WLT). It's currently a four-star stock but has a long five-star history. Our players agree that it's a solidly run homebuilder, hedged by a stake in coal and natural gas operations.

In the suburbs of Orlando, you can find diversified equity and currency trader International Assets Holding (NASDAQ:IAAC), which has "exceptionally bright management," according to CAPS All-Star dhd1491, and should "rebound and perhaps double by spring 2008. GAAP accounting restrictions make IAAC's earnings appear smaller than they really are. Listen to their conference calls for explanation."

Then there's the heartache of online media hopeful MIVA (NASDAQ:MIVA). I'm stretching down to Fort Myers for this one-star stock, just to see why fellow Fool Rick Munarriz (TMFBreakerRick) likes the company: "Oh, I've been burned by you before, my little former FindWhat.com -- but you can't lie in obscurity forever. Right?" Right, amigo.

The Foolish finish
It's no surprise that Hidden Gems is the newsletter best represented in the Central Florida region. With a median market cap of just $186 million, most of these businesses have largely escaped the notice of Wall Street analysts, and even the CAPS community. The end result paradoxically looks a bit hotter than Miami, but it takes a dedicated investor to uncover the treasures hidden here.

Do you agree? Disagree? Feel free to weigh in on the Everglades-to-Gainesville market -- or on any stocks at all, really -- by joining Motley Fool CAPS and blasting away with your ratings and commentary pitches. And if the Sun Coast isn't your 'hood, maybe we'll come round where you live the next time.

Further Foolishness:

• 4 Stocks That Took a Hike
• This Just In: JPMorgan Upgrades Darden
• Jabil Keeps Investors Waiting
• Disney Comes Home
• Rating Performance With CAPS

Fool contributor Anders Bylund is a Disney shareholder but holds no other position in any of the companies discussed here. He is still wondering why the Sunshine State gets so much rain every summer, and why Red Lobster has a better Caesar salad than Olive Garden. These things just seem wrong. You can check out Anders' holdings if you like. Disney is a Stock Advisor pick. Foolish disclosure is always red-hot.