The idea of supplying customers with recommendations based on prior shopping habits isn't all that new. If you've signed on for service with Blockbuster or Netflix, you know about the movie recommendations they hook you up with (mine right now include The Year of the Yao and About Schmidt -- does that say something about me?). Shoppers on Amazon.com get a similar slew of suggestions based on their previous purchases.
Investing in stocks may not be exactly comparable to renting a movie or buying a book, but with thousands of stocks out there, finding new ideas can often be overwhelming. To help grease the ol' mental machinery, The Motley Fool's CAPS service recently started providing players with daily stock recommendations.
It works like this: CAPS members create a portfolio by rating some of their favorite (and least favorite) stocks. The super-secret stock-of-the-day algorithm, which I've heard has to be run on a Cray supercomputer and uses pi to the 104th decimal place, then starts churning out highly rated stocks for each player based largely on their prior selections.
To give you a sampling of the kinds of ideas CAPS is doling out, here are the five recommendations the CAPS supercomputer spit out for me last week:
|
Day |
Stock |
Market Cap |
CAPS Rating (out of 5) |
|---|---|---|---|
|
Monday |
Owens Corning |
$4.7 billion |
**** |
|
Tuesday |
Exelixis |
$1.1 billion |
***** |
|
Wednesday |
Multi-Color Corp. |
$264 million |
***** |
|
Thursday |
Tidewater |
$3.8 billion |
**** |
|
Friday |
Banco Macro |
$2.4 billion |
***** |
As smart as the CAPS stock-of-the-week algorithm may be, it's still just an algorithm, so be sure to look before you leap on any of its suggestions. With that in mind, I thought I'd kick you off with some thoughts on a couple of these stocks.
Preparing to excel
When it comes to drug development and approval, if you have the capacity, it doesn't hurt to have a bunch of irons in the fire. So it may not be a surprise that so many CAPS members -- 1,162, to be exact -- have given Exelixis the thumbs-up. For a development-stage drug company, this Rule Breakers pick has a formidable pipeline of drugs, and fellow Fool Brian Lawler recently compared it to Genentech
Exelixis has caught the attention of CAPS All-Star SureBeatsWorking, who says:
[Exelixis appears] to have a lot of new drugs in their pipeline (I believe it's got 14 in clinical testing presently!) and good partnerships with some of the larger pharmaceuticals to help further develop these drugs that they wouldn't be able to do solo. ... This is a forget-about-it 5 year + investment, or even forget-about-it 10 years investment.
Riding the tide
I keyed right in on the following excerpt from Tidewater's fiscal 2007 business highlights: "Strong industry fundamentals improved the company's operating performance."
If you've heard the advice that you're often better off owning a marginal company in a hot industry than a great company in a lousy industry, you surely aren't surprised that Tidewater's stock has been doing so well. After all, right now, whether you're looking for crude, pumping it, refining it, marketing it, or providing any number of services to any of the companies engaged in the preceding activities, you're more likely than not spending your weekends doing Uncle Scrooge-style swan dives into pools of money.
CAPS players have taken notice of Tidewater in particular because of its current valuation. CAPS player JuniorBuffet says:
[Tidewater is a] drilling services firm with the lowest PEG ratio in the industry at 0.14 (and recently hit 52 [week] high which means it's trending higher). ... They transport crews and supplies as well as tow and anchor rigs, which are necessities for all these deep sea drillers receiving new contracts. ... They also assist in offshore construction and perform 3-D seismic exploration, which are also big plays currently.
Now for the real question: Are you getting your own CAPS Stock of the Day selections yet? If not, what are you waiting for? CAPS is free, and getting your Stock of the Day picks is much more fun than having me get California's Governator to track you down and give you a wedgie. And don't think I won't do it ...
More CAPS Foolishness:
Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. Netflix and Amazon.com are Motley Fool Stock Advisor picks. Exelixis is a Rule Breakers recommendation. Matt tried to give The Fool's disclosure policy a wedgie, but was overpowered by its incredible might. Don't worry, he learned his lesson.
