Should You Buy These Stocks Now?

Some stocks simply have such great potential that "everyone" knows they're a good buy today. Yeah, right.

If we knew in advance that Middleby would return more than 1,800% over the past decade, we'd have mortgaged our house on it -- and yours, too! It's easy to see which companies have been winning investments after the fact. We need to know beforehand which stocks will grow hundreds of percent in value over the years. That's where Motley Fool CAPS comes in.

The more than 93,000 professional and amateur investors in CAPS rarely agree on a stock's prospects. Motley Fool Hidden Gems recommendation Dawson Geophysical (Nasdaq: DWSN  ) is a well-respected, top-rated stock, but 41 of the more than 1,700 CAPS players who've rated it still believe it will underperform the market. So when you come across a stock that everyone on CAPS thinks will outperform, you've got something special. Here are a handful of those "obvious" investments.

Company

Bulls

All-Star Bulls

Price

Return on Capital, TTM

SL Industries (AMEX:SLI)

41

19

$19.00

14.8%

PowerShares DWA Technical Leaders  (NYSE:PDP)

18

4

$24.72

NA

iShares S&P Global Utilities  (NYSE:JXI)

21

3

$63.91

NA

iShares Morningstar Mid Growth Index  (NYSE:JKH)

17

5

$87.69

NA

Quicksilver Gas Services LP (NYSE:KGS)

31

12

$23.37

5.7%

Sources: Motley Fool CAPS and Capital IQ, a division of Standard & Poor's. TTM = trailing 12 months; NA = not applicable.

As always, none of the companies on this list should be considered formal recommendations -- just starting points for further research. We've simply used CAPS to narrow down your workload.

Now that's a gas!
Limiting itself to Fort Worth Basin in northern Texas, Quicksilver Gas Services gathers and processes natural gas from the Barnett Shale formation. According to the industry analysts at the Perryman Group, the Barnett formation is one of the largest onshore natural gas fields in the country, with known reserves of 2 trillion cubic feet of gas, and an estimated 30 trillion cubic feet of total natural gas resources. By not taking title to the gas and gas liquids it gathers -- the company operates on a fixed-fee contract instead -- Quicksilver is able to avoid any of the commodity price exposure associated with such a strategy.

Since Quicksilver Resources (NYSE: KWK  ) , one of the larger natural gas companies operating in the area, is a majority owner of this partnership, most of the gas volumes Quicksilver Gas Services is processing are owned by its parent.

That was one of the reasons top-rated CAPS All-Star alkamist27, with a 97.93 player rating, listed last summer in the gas processor's favor. Alternately, CAPS player factoids believes that its underlying value makes Quicksilver a winner. Using forecasts from two separate analysts, factoids derived a model of cash flow distribution last fall that foresees 20% to 30% growth over the next few years.

However, CAPS investor TexasLonghorns, who identifies himself as an oilfields worker, considers Quicksilver's proximity to the Barnett Shale formation vital to its ability to get the gas out. Here's his pitch from the end of January.

Having worked in the Oil Patch and being from Ft.Worth, I know Tom Darden and he is a shrewd businessman. This company will pay off, ride the great dividend and they are sitting right on top of the Barnett Shale, which is a LARGE gas field. Gotta move the gas out of there!

As natural gas prices surged at the beginning of the year, natural gas companies came back into favor, but their shares have since settled down again. While some analysts believe that the valuations of some natural gas producers are getting ahead of themselves, few seem to think we will be experiencing cheap oil or gas anytime soon. Elevated prices, even if they're not at record highs, still mean plenty of profits for oil and gas companies.

Let's hear from you
How about your take on these or other "obvious" winning investments? Is this a chance to add the next "buy now" stock to your portfolio? If you want to add your two cents, sign up to join the 100% free Motley Fool CAPS community.


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