In music they're called one-hit wonders, singers who belt out tunes but are never able to regain the magic of their big hit song. Think Norman Greenbaum's "Spirit in the Sky" or Brownsville Station's "Smokin' in the Boys Room." Monster hits never to be repeated.
We have seen similar one-hit wonders in stocks, too, like Pets.com or drkoop.com. Companies that burst on the scene -- many during the tech bubble heyday -- and never to live up to the promise they held.
Whole lotta shakin' going on
While nostalgia's fun, "10 Stocks to Shake the Market" isn't about finding stocks that can't repeat their success, it's about looking at those that have made big moves and are likely to continue doing so.
To do that, we're looking at the 10 stocks that made some of the biggest moves up yesterday. We'll then pair that with the ratings issued by our Motley Fool CAPS community. Those that rate higher suggest the members believe they'll continue to move higher in the future and outperform the market.
In the first 20 months since we first began tracking the collective intelligence at CAPS in late 2006, the data shows that newly minted five-star stocks offer the best opportunities for investors, while the lowest-rated companies fared the worst. Four-star stocks outperformed the market by seven percentage points, and five-star stocks -- top honors in CAPS -- did even better.
Stock |
One-Day % Change |
CAPS Rating |
---|---|---|
XL Capital |
55.32% |
* |
KeyCorp |
54.25% |
* |
Regions Financial |
28.62% |
** |
Rite Aid |
28.36% |
** |
Zions Bancorp |
24.32% |
* |
SunTrust Banks |
21.29% |
* |
Morgan Stanley |
21.22% |
** |
Citigroup |
18.22% |
** |
Bank of America |
16.41% |
*** |
Hercules Offshore |
10.87% |
**** |
Most of these stocks are viewed unfavorably by the members of CAPS as evidenced by their one- or two-star ratings, so we're going to zero in on the only one to earn a better-than-average four-star endorsement.
Hercules Offshore
Not only has the collapse in commodity and fuel prices zapped Motley Fool Hidden Gems pick Hercules Offshore, but the recent hurricane activity in the Gulf of Mexico has caused the oil and gas services provider to have some downtime. The storms this season resulted in an $8.7 million hit to third quarter revenue while also causing damage to some of Hercules platforms.
CAPS member 4thRockFool felt back in August that the commodity correction had unfairly affected Hercules.
Commodity correction is overblown and has wrongly dragged down the drillers and other service providers who will continue to do well if oil remains over $100 barrel. Hero is trading near a three year low after a correction of nearly 50% in the last few months.
A gusher of opportunity
Even though oil has fallen, the respite we've enjoyed probably won't last too much longer. Prices temporarily moved back up over $80 a barrel again as the coordinated efforts by governments worldwide were announced, but further economic news has since reversed that again. Hercules seemed to have avoided much damage from the hurricanes, though two rigs were affected. On the other hand, dayrates of jack-up rigs have moved up recently, which will be good for business.
The Foolish bottom line
Selling at about 3.5 times next year's earnings, Hercules Offshore is trading at a lower multiple than many of its competitors. Continued demand for its rigs, greater demand for its other marine services, and a low valuation point to Hercules staying in the black.
In the coming weeks, Fool co-founder David Gardner and his Motley Fool Pro team will invest $1 million in a portfolio designed to help you make money in any market. The service, which just launched, will rely heavily on proprietary CAPS "community intelligence" data to establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds (ETFs). To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.