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Beat This Stock!

There can only be one winner in sports. Whether it's the World Series, the Super Bowl, or the Stanley Cup, a single team comes out on top.

But in investing, while one stock may indeed have the greatest return in any one year, there are still many roads available for us to travel for profits. To fund our financial security, we don't need to find the "best" stock year after year. Just finding really good ones, really consistently, will help us achieve our goals.

To do that, we're going to turn to the 75,000 investors at Motley Fool CAPS. We'll look not only at which stocks are top-rated, but at which ones the CAPS community thinks can beat even those superstars. For example, Russian mining and steel company Mechel (NYSE: MTL  ) is one of the highest-rated Big Board stocks, and it has also returned more than 200% over the past year. Yet as good as Mechel has been, and as bright as its prospects are (as indicated by its five-star rating), there are companies that rank even higher in investor sentiment.

Finding them is easy. Go to the CAPS page and plug in the ticker for Mechel. In the top right corner, click the "Beat This Stock!" button, which gives you the company with the next highest rating. While CAPS shows only one- to five-star rankings, behind the scenes, all companies in CAPS have a distinct numerical ranking. As the service explains, "In other words, there is a No. 1 stock in CAPS and a worst-ranked stock in CAPS." If you click enough times, you'll eventually arrive at the World Series winner of stocks in the CAPS universe.

So who ranks better than Mechel? Below are the next five stocks that rank higher than Mechel in the estimation of CAPS investors. We'll then take a look at some of the reasons why CAPS players think these companies will outperform not only the market, but Mechel as well.


1-Year Return

Long-Term Growth Forecast

CAPS Rating





Republic Airways (NASDAQ:RJET)




Banco Bradesco (NYSE:BBD)




Gildan Activewear (NYSE:GIL)




HealthExtras (NASDAQ:HLEX)




Rofin-Sinar (NASDAQ:RSTI)




Sources: Yahoo! Finance, Motley Fool CAPS.

This is obviously not a list of stocks to buy; rather, it is the basis for starting your own due diligence. The individual ratings of each company are part of the proprietary secret sauce on CAPS, but just as each CAPS investor gets a rating, so does each stock. (This is also a game you can play at home. Punch in the ticker symbol for your favorite stock and see which companies are ranked higher.)

Looking with laser-like focus
While there's at least one company that beats out even Rofin-Sinar (check out CAPS to find out which!), investors tend to think this manufacturer of laser-based products is indeed a winning company. More than 900 investors have weighed in on it, with 99% rating it as an "outperform."

That kind of endorsement may just be warranted after the stellar third-quarter earnings results Rofin-Sinar posted: Revenue, orders, and profits all came in at record levels. Cutting lasers for machine tool industries in both Europe and Asia, particularly in China, are one strong growth driver, and sales to the solar energy industry are growing strongly as well. While sales to the jewelry, medical devices, and semiconductor industries have weakened, the Motley Fool Hidden Gems recommendation has seen improved pricing on sales of stronger lasers. All this was then followed by a strong fourth quarter, too.

The diversity of its customer base was one of the things that attracted top-rated CAPS All-Star MArgersinger, with a 98.68 player rating, to Rofin-Sinar earlier this year.

This is a proven leader in industrial laser and component manufacturing. The diversified nature of the company's customer base promises correlation with the growth in the global economy. The company generates gobs of cash and has virtually zero debt on its balance sheet. At current prices, the company's stock is certain to outperform over the long-term.

More recently, CAPS investor LazarKacho penned the top bull pitch for Rofin-Sinar, noting many of the strong metrics the laser maker has been homing in on:

Rofin Sinar exhibits strong sales and revenue growth, which is combined with increasing margins leading to an increase in net income. The company reported record level of order entry, and beat analysts' estimates for the most recent quarter as of November 8, 2007. The business is stronger in Europe/Asia than in North America, with net sales increasing by 25% to $367.1 million (2006: $294.4 million) in Europe/ Asia (the largest markets in the world; economy of Europe becoming stronger and stronger than the US economy), and decreasing by 11% and totaling $112.6 million (2006: $126.5 million) in North America. Company board approved a buy-back program, which authorizes the repurchase of up to $120 million of the Company's Common Stock, or approximately 10% of the shares of Common Stock currently outstanding based on current market prices. The share buyback program is authorized to begin November 15, 2007.

Just beat it!
So that's what some top investors are saying about this top-rated stock. We started off with one well-performing investment and have found five more to investigate. What do you think? Does your favorite company top the list? Get on over to Motley Fool CAPS and let us hear what you have to say.

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Rich Duprey

Rich has been a Fool since 1998 and writing for the site since 2004. After 20 years of patrolling the mean streets of suburbia, he hung up his badge and gun to take up a pen full time.

Having made the streets safe for Truth, Justice and Krispy Kreme donuts, he now patrols the markets looking for companies he can lock up as long-term holdings in a portfolio. So follow me on Facebook and Twitter for the most important industry news in retail and consumer products and other great stories.


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5/25/2016 10:52 AM
BBD $6.87 Up +0.03 +0.44%
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