No one knows a company better than those who run it. While they're not always right -- there are plenty of times they miss their own estimates, after all -- they have more insight into how their companies will behave in the future.
Sometimes, we look to see whether insiders are buying stocks. Other times, we check to see whether the companies are buying back their own shares. Either can be a bullish sign for a company.
We want to tap into that knowledge by looking at companies that raise their earnings guidance for the coming quarter or year. Over time, earnings growth follows sales growth, and when a company says it's going to have more profits, we expect the stock price to soon follow.
Tap into CAPS
Then we're going to turn to the Motley Fool CAPS community-intelligence database to pinpoint promising stocks. The system asks professional and novice investors alike to rank the thousands of stocks in the universe, and CAPS overweights the opinions of the most successful and accurate among them. From that outcome, a CAPS rating is assigned to each company from one to five stars, with five being the best.
We've ended up harnessing the knowledge of more than 25,000 analysts so far to get the inside scoop on whether these companies are a flash in the pan or have staying power.
So here's the list of some recent companies that have raised their earnings guidance, coupled with the knowledge expressed in the CAPS community.
|
Company
|
Forecast Period
|
New Guidance
|
Analyst Forecast
|
Year-Ago Actual Earnings
|
CAPS Rating
|
|
Wendy's (:WEN)
|
FY 2007
|
$1.26-$1.32
|
$1.25
|
$0.83
|
*
|
|
Chattem (:CHTT)
|
FY 2007
|
$2.71-$2.96
|
$2.76
|
$1.95
|
*
|
|
Actuant (NYSE:ATU)
|
Q3 2007
|
$0.89-$0.96
|
$0.90
|
$0.86
|
*****
|
|
Novatel Wireless (NASDAQ:NVTL)
|
Q1 2007
|
$0.35
|
$0.10
|
($0.05)
|
***
|
|
Accenture (NYSE:ACN)
|
FY 2007
|
$1.88-$1.93
|
$1.87
|
$1.59
|
*****
|
Source: Company filings; Yahoo! Finance. CAPS Ratings courtesy of Motley Fool CAPS.
As always, this is not a list of recommendations to buy, but rather a starting point for further research.
Raising their voices
Here's what some CAPS players are saying about these stocks.
- CAPS All-Star MG80 says Accenture is another "one of those 'cash-rich' companies that I love to find. Market cap is a little over $20B, almost $3B in cash net of debt. P/E to growth is 1.2. [Return on equity] is nice. Well-known company."
- Highly rated CAPS player smith972 expresses caution that Motley Fool Hidden Gems recommendation Actuant has low insider ownership but says it's "a manufacturer of tools, small machinery, and hydraulics [that] goes in the category of necessary equipment that America and Europe is in need of. Demand will increase and management will be aggressive to fill that gap."
- And Wendy's is not the burgermeister among CAPS players. Another CAPS All-Star, CubsBearsBull43, says "Don't see much to like here. ... Salad concepts are not very exciting. Baja Fresh was their growth vehicle but they sold that."
That's what some of the CAPS players are thinking about these companies. Do you agree? 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. Join the newest venture into collective investor intelligence today.
Actuant is a recommendation of
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Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. Accenture is a Motley Fool Inside Value pick. The Motley Fool has a disclosure policy.
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