Finding Stocks at a Fever Pitch

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

One of the service's unique features is that, as a member, not only can you rate a company on whether you think it will outperform or underperform the market, you can express why you think it will, and 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 multipage footnoted thesis. In the context of the overall assessment of the stock, a pitch is one more data point to include in your assessment.

Throwing strikes
Useful analyses give salient details about a company and its prospects -- on both the bull and bear sides -- 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.

TheGarcipian is not only a top pitcher who's received more than 860 recommendations for his pitches, but also a top-rated All-Star with a 99.87 player rating.

Here are a few of his most recent stock picks:

Company

CAPS Rating
(5 max)

Call

CAPS Score

Pitch

Agrium (NYSE: AGU  )

*****

Outperform

0.97

No Pitch

Aluminum Corp. of China
(NYSE: ACH  )

*****

Outperform

13.13

Read It!

Dawson Geophysical (Nasdaq: DWSN  )

*****

Outperform

(9.83)

Read It!

Diamond Offshore Drilling
(NYSE: DO  )

*****

Outperform

75.21

Read It!

Fannie Mae (NYSE: FNM  )

*

Underperform

25.12

Read It!

MDC Holdings (NYSE: MDC  )

**

Underperform

(12.67)

Read It!

Taseko Mines (NYSE: TGB  )

*****

Outperform

(7.17)

No Pitch

Strength and flexibility
The suppleness yet durability of copper have made it the metal of choice for everything from plumbing to pennies. Molybdenum, on the other hand, has one of the highest melting points of any metal, making it the preferred option to include in many high-strength steel alloys. It is mined as an ore on its own, and it's recovered as a byproduct of copper mining.

Taseko Mines owns and operates the Gibraltar Mine in British Columbia, which is rich in both copper and molybdenum. Even though the mine has closed on occasion over the past few decades because of low copper prices, the market price today is high and is in fact about three times higher than when Taseko reopened Gibraltar in 2004. With an improved expected 20-year life span, thanks to results from recent exploration drilling and expanded production, Taseko has already minted a pretty penny from it and should continue to receive the benefits of its efforts.

The boom-and-bust cycles that commodities typically go through must be kept uppermost in investors minds, as CAPS player (and mining employee) JDC33D suggests. But in boom times, as it seems to be now (and has been for a few years) with copper, you can do well.

Here's an excerpt:

Much of the worlds metals that were mined throughout our history are still in use somewhere today. Due to inflation, the metals sector is an excellent sector to be in, due to the fact as the dollar declines, metals such as gold will only increase in value. ... However, on the other side, metals always go through cycles. Starting around three years ago, we began our upward trend. While we will probably continue this upward trend for quite some time with the current market, one must realize there will be a large correction at some point.

Inside pitches
Now just because a top-rated All-Star investor writes a go-go pitch for a company is not reason enough to go out and buy or sell any stocks. You still need to perform your own due diligence. But it's worth considering what All-Stars say as part of your decision.

A Foolish stance
Step up to the batter's box of Motley Fool CAPS, and make your opinions known. Because CAPS is a completely free service, throw as many pitches as you like at the stocks of your choice. You'll be helping your fellow investors make better investing decisions.

MDC Holdings and Dawson Geophysical are Motley Fool Hidden Gems recommendations. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey does not have a financial position in any stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.


Read/Post Comments (2) | Recommend This Article (9)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On June 05, 2008, at 5:20 PM, TheGarcipian wrote:

    Hi Rich,

    Ok, ya got me, caught me shorthanded and without a pitch for Agrium and Taseko Mines. Heh. I'm sure you meant nothing by it (and no offense was taken by me), but I do see it as a challenge to provide a pitch with every stock pick I make. Not that I'm a highly paid analyst (or even a lowly paid one), but I want to know what I was thinking when I selected that stock. That's always been a big problem for me, unsure at some future time whether to sell a loser or keep a winner because I don't have any point of reference with which to make that judgment. The pitch area provided by the CAPS system provides the perfect place for such a point of reference, and I encourage every CAPS player to make as much use out of this area as possible.

    To that end, I've added a pitch for Agrium. It's located here:

    http://caps.fool.com/Pitch/AGU/2571132/i-believe-agrium-inc-...

    Cheers and Fool On,

    --Gar

    P.S. Thanks for the plug too!

  • Report this Comment On June 06, 2008, at 7:06 AM, TMFCop wrote:

    Gar,

    I agree that CAPS gives a great reference point for your thinking at the time a selection is made, and I ought to do more of it myself. Only thing is, you better get working on one for Taseko Mines as well! ;>

    Rich

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