When a company's stock price is lower than the mercury in a North Dakota thermometer in February, investors tend to give it the cold shoulder. But as the market warms to a stock's prospects, its price can heat up in a hurry. Alas, you can rarely tell that a stock is melting investors' hearts until after it has made that leap.
Taking the market's temperature
But Motley Fool CAPS' proprietary ratings, aggregated from the opinions and accuracy of 160,000-plus members, offer a great way to monitor investor sentiment. Following a CAPS rating trend can help us determine the best time to invest. Let's look at companies previously rated one or two stars that have recently enjoyed a bump in investor confidence and see whether they're heating up -- or headed back to the deep freeze.
|
Company
|
CAPS Rating
(out of 5)
|
Recent Price
|
EPS Estimates (This Year - Next Year)
|
|
Ashford Hospitality Trust (NYSE: AHT )
|
***
|
$7.96
|
$0.88 - $1.18
|
|
Cerus (Nasdaq: CERS )
|
***
|
$3.10
|
($0.36) - ($0.17)
|
|
U.S. Energy (Nasdaq: USEG )
|
***
|
$7.06
|
($0.21) - ($0.21)
|
Source: Motley Fool CAPS.
Obviously, this is not a list of stocks to buy -- just a starting point for further research. Yet if some CAPS members are taking notice of these stocks, maybe we should, too.
Caution: Contents may be hot
The quarterly results of Ashford Hospitality Trust, which owns hotel properties operated under brands such as Hilton and Marriott (NYSE: MAR ) , seem to make storytellers out of those who have been warning of an impending commercial real estate collapse. Although revenue was off 18% and RevPAR (revenue per available room) was down 13%, Ashford posted adjusted funds from operations (FFO) of $0.32 a share, nicely ahead of analyst expectations of $0.29.
I've been skeptical about a commercial real estate recovery, and though prices seem to have bottomed out in recent months, I'm still wary. According to the Moody's/REAL All Property Type Aggregate Index, values have fallen 40% from their peak. But as in residential markets with a large overhang of underwater or foreclosed properties, the pressure on pricing should continue. Office vacancies are above 17% for the first time since 1994, and rental rates are off 7.4%.
CAPS members aren't convinced that real estate will continue to collapse. Of the members rating Ashford, 82% believe it will outperform the market, and All-Star Timbofittz88 says the real estate investment trust is running an efficient operation.
The hospitality industry will have a much greater increase going up than it declined while going down. These companies are all running super lean and are ready for a recovery!
Get the blood pumping
Commercial agreements across Europe last year seemed to kick-start things for blood transfusion specialist Cerus, as it recently reported its third consecutive quarter of revenue growth and narrowing losses. France also signed on to help Cerus develop its Intercept system for red blood cells, which looks to reduce the risk of transfusion-transmitted diseases. The company has had some notable failures in the past, but the agreement suggests that clinical trials are showing promising results.
Cerus' Intercept system is designed to inactivate a broad range of pathogens in the blood without damaging the cells themselves, thus reducing risks. Immucor (Nasdaq: BLUD ) is also part of the $1 billion blood reagent industry, and it seeks to prevent reactions during blood transfusions. Its systems help health-care providers identify the antibodies and antigens present in patients' and donors' blood.
Fewer than 100 members have rated Cerus on CAPS; 91% of those believe it will outperform the market. That would be in line with the two Wall Street analysts covering it who are unanimous in thinking that this stock could be good for your portfolio.
Smart-grid choices
Another company keeping a low profile is U.S. Energy, a natural resources exploration company seeking to capitalize on the boom in commodities. It has a rich vein of molybdenum that could generate some serious returns if Thompson Creek Metals (NYSE: TC ) exercises its option to purchase a huge stake in the property. The partnership U.S. Energy has with Brigham Exploration (Nasdaq: BEXP ) for oil and gas in the Williston Basin might be of more immediate importance.
The two companies have already started selling oil from the well, and gas sales are expected to begin by the end of the month. With as many as five more wells expected to be drilled by Brigham this year, CAPS member bulabob is excited about U.S. Energy.
With the contracts in place for Williston with [Brigham], and the probability for success, [U.S. Energy] will make a big move.
Checking the mercury
Are these stocks invitingly warm or bitterly frosty? It pays to start your research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. Then weigh in with your own thoughts on which stocks you think are heating up and which offer cold comfort. It's free to sign up.
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