When asked for the secret of his success, baseball player Wee Willie Keeler replied, "Hit 'em where they ain't." What worked for Willie at the plate applies equally well in investing.
Seeking stocks that others ignore, shun, or simply forget gives individual investors like you an edge over the professionals. When Wall Street turns a blind eye, you have a chance to get in before these stocks get discovered -- or rediscovered -- and start taking off.
Below, we'll check out companies with only a handful of analyst coverage, then pair our list with some opinions from the Motley Fool CAPS community. A stock that garners CAPS' top ratings, but hasn't yet caught analysts' attention, could be your next home run investment.
|
Company
|
CAPS Rating
(out of 5)
|
Wall Street Picks
|
5-Year EPS Growth
|
|
A-Power Energy Generation Systems (Nasdaq: APWR )
|
****
|
5
|
20%
|
|
Terra Nitrogen (NYSE: TNH )
|
****
|
2
|
N/A
|
|
Tesla Motors (Nasdaq: TSLA )
|
*
|
1
|
N/A
|
Source: Yahoo! Finance.
Remember, without analyst support, you'll have to do your own scouting to see whether these stocks deserve a spot in your portfolio. Don't just buy or sell them based solely on their appearance here.
A utility player
While the S&P 500 has put together a string of winning days, finally pushing it into positive territory for the year, the CAPS wind power group is up more than 5% over the past month and almost 10% for the past year.
A-Power Energy Generation Systems has been a big part of that move, up almost 4% itself for the past 30 days. It reported that revenues more than doubled in its latest quarter and that net income was flat at $0.05 a share, though it had significantly more shares outstanding this time around. That was a wide miss from analyst expectations of $0.22 a stub, but the market loved the guidance the company offered. Management raised annual revenue estimates to $500 million from $380 million and said profits should hit $60 million instead of $45 million.
American Superconductor (Nasdaq: AMSC ) is up 10% over the past month, while carbon fiber maker Zoltek (Nasdaq: ZOLT ) rose more than 4%, but CAPS member lytri is most optimistic about A-Power Energy Generation Systems.
This stock is currently trading at a discount. They will continue to be looked at as alternative energy keeps growing and their increasing cash from operating activities will continue to grow, especially with the addition of their two new managers, who bring both strong business experience in Mr. Cheung and engineering experience in Mr. Li.
All fun and games
While corn prices are half of what they were two years ago, when commodities were busting records everywhere, the $3.75 or so a bushel corn goes for today bodes well for farmers and for fertilizer companies like Terra Nitrogen, PotashCorp (NYSE: POT ) , and Mosaic (NYSE: MOS ) that provide the crops for their fuel.
Terra Nitrogen is looking for continued growth in corn demand to generate higher revenues and profits. Ethanol production will play a key role, and congressional proposals to have the Environmental Protection Agency boost ethanol content in gasoline to 15% from 10% could drive prices higher once again.
In the meantime, until the cycle works its way around again, CAPS member falcon2382 says to just sit back and enjoy Terra Nitrogen's juicy dividend.
I'll sit on the 6% dividend. Profit margins are thick for this well run company. In addition to currency fluctuations, I think it is being beat down because of the industry cycle and the painful collapse of the restaurant and hotel industry around the western world, which lowered demand for many food products, which in turn [affected] agriculture business and all fertilizer companies as a result. I noticed [Monsanto] just pulled up out of its funk recently and broke a major downward trend line. [I'll] wait for investors to pick up on [Terra Nitrogen].
Kicking it higher
Just because Tesla Motors is the new car kid on the block doesn't mean everyone's going to sit around and ooh and ahh over it. Its electric cars may be cool as heck, but there's a lot of resistance to the idea that a new car company -- or at least its stock -- can do well these days. Just 37% of the more than 400 CAPS members who added their opinion on the Tesla Motors CAPS page after the IPO think it will outperform the broad market averages.
While the consensus is against Tesla, CAPS member seeburg220 is positive about the manufacturer.
I am convinced Electric Vehicles will eventually dominate the car market in the long term. Technologies will improve (look at the personal computer from 1987 vs 2010 for example). Tesla Motors has this spark of excitement, that I don't get from GM and their Volt (although the Volt may do just fine). With the recent partnership with Toyota, and Toyota's background with the Prius, I think Tesla will eventually end up with an electric car that most of us can afford.
Swing for the fences
When seeking investments where no one else is looking, Motley Fool CAPS is the best place to start your own research. 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.
Sign up today for the completely free service and tell us whether these hidden stock opportunities will help us go one up on Wall Street.
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