Stocks of the Week

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 exactly be comparable to renting a movie or buying a book on Amazon, 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 that CAPS is doling out, here are the five recommendations the CAPS supercomputer spit out for me last week:

As smart as the CAPS Stock of the Day 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.

Planning a route to good returns
Though NAVTEQ may get less attention than GPS mainstay Garmin (NASDAQ:GRMN), that doesn't mean it's any less important when it comes to the job of getting you from one place to the other. NAVTEQ is a leader in providing digital map information for the kinds of devices that Garmin and TomTom make, as well as Internet mapping applications. And with the acquisition of Traffic.com in 2006, the company has added a prime source of real-time traffic data to build into its maps.

CAPS All-Star Manifest has given NAVTEQ the thumbs-up:

Paraphrasing Barry Manilow, "NAVTEQ draws the maps the whole world drives." Following a challenging 2006 -- where net margins were still maintained in the 20% range, [and] growth prospects for middle class vehicles and portables (GPS-PDAs, cell phones) is promising. We have [a] company rated at excellent quality (financial strength, [earnings] stability, relative growth) and a projected annual return of approximately 17%.

A stock that doesn't crawl
If you've ever passed a construction site, it's very likely that you've seen some equipment from Caterpillar. The company is probably best known for its heavy machinery -- such as backhoes, loaders, and bulldozers -- that it sells to firms in the construction, mining, oil and gas, waste, marine, and forestry industries. In addition to full machines, though, the company also sells various types of engines, and it offers financial services such as financing and insurance for its customers.

Though some think that Caterpillar, which tends to be cyclical, is hitting peak earnings right now, many CAPS players like the stock as a long-term hold. probslvr says:

Having had considerable exposure to the construction industry, I've observed a couple of thing[s] about Cat.

1. They build a superior product, even competitors acknowledge this.

2. They have built an incredible network of the highest caliber dealers in the industry.

3. Because of 1 and 2, they have built the deepest, strongest customer loyalty I've ever seen. For any company who operates mining, excavating or forestry equipment; running Cat equals reducing risk. ...

4. In nearly every other industrial market area, equipment builders from US and Europe have taken a serious hit since the 80's from competitors from Asia and [South] Korea. Cat has held its own and, in some cases, grown its market share [in] Asia.

[It's a] class act!

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:

• 5 Top Micro-Cap Stocks
• 3 More Undiscovered Growth Stocks
• 5 Dynamic Dividend Stocks

Netflix, Garmin, and Amazon are Motley Fool Stock Advisor picks. You can find out why with a 30-day free trial of the market-beating newsletter.

Fool contributor Matt Koppenheffer does not own shares of any of the companies mentioned. 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.