Finding Stocks at a Fever Pitch

The collective power of thousands of investing minds is the driving force behind Motley Fool CAPS, the leading investor intelligence community. Membership has actually grown to more than one hundred thousand investors: professionals, novices, and every level in between.

One of the service's unique features is the ability to not only rate a company on whether you think it will outperform or underperform the market, but to express why you think it will, in as much detail as you want. These analyses, or "pitches," can be as simple as "This stock has a low P/E ratio," or as complicated as a mulitpage, footnoted thesis. In the context of the overall assessment of the stock, a pitch is another data point to consider.

Throwing strikes
Useful analyses are those that give salient details about a company and its prospects -- on both the bull and bear side -- and the best ones earn recommendations. We call the investors who merit the most recommendations for their analyses our "pitch-writing superstars."

Let's look at these top investors and some of their best recommendations and get a sense of what makes up strong analyses and winning investing.

Sunnyside up
pencils2 is a superior pitcher who's received more than 800 recommendations for his pitches. He's also a top-rated All-Star with a 99.80 player rating. He's received 10 recs so far for this mid-January pitch for Motley Fool Hidden Gems recommendation Sun Hydraulics (Nasdaq: SNHY):

Sun Hydraulics designs, manufactures, and sells screw-in cartridge valves and manifolds used in hydraulic systems. The company is expanding globally and sells its products primarily through independent distributors. In fiscal 2006, 53% of Sun's sales came overseas. ... their products, "control force, speed and motion as integral components in fluid power systems". Definitely not a very exciting company, and only one analyst follows the stock. ...

Sun is doing something right, because since fiscal 2002 operating efficiency has strongly increased. The company's been a very consistent producer of ... free cash flow over the past several years as well. The company has been able to use this cash to both expand the business and strengthen the balance sheet. ...

Internationally the company still has huge expansion possibilities ... and the company is in a fabulous financial position to take advantage of those opportunities. However, grumpy old Mr. Market doesn't seem to be looking at that. Just three months ago in October, the stock was hitting $35. Today, it sits at less than $21. And did I mention that insiders own 31% of all shares outstanding? I can't help but think this is a great time to buy a business that should do very well as economies around the globe develop and expand.

It's easy to see why a pitch like that adds value to CAPS as well as value to someone contemplating an investment decision. As was noted, Sun Hydraulics has a significant international presence, and even with a market cap of $656 million, it's still a small-cap stock, far smaller than its rivals Emerson Electric (NYSE: EMR) and Parker-Hannifin (NYSE: PH). Sales abroad were a large part of the reason for shining growth last year.

More inside pitches
Here are some of pencil2's recent stock picks and links to his pitches.

Now just because a top-rated All-Star investor writes a highly recommended pitch for a company is no cause to go out and buy and sell those stocks. You still need to perform your own due diligence. But it's worth considering what they've written as you make your decision.

A Foolish stance
Step up to the batter's box of Motley Fool CAPS and make your opinions known. CAPS is a completely free service, so you can throw as many pitches as you like at the stocks of your choice. They can be as long or as short as you want. You can come back later to see how your pitch worked out. Through this process, you will likely become a better investor. And you're helping others. How Foolish is that?