Surprises are part of the game when it comes to picking stocks. Sometimes this can mean bad news, like one of your top stocks revealing that management has been backdating options.
Other times, though, the market gets caught off guard by positive surprises from stocks that most investors thought were down for the count. In this situation, investors who stood by the stock often break out into a chorus of "I told you so," as short sellers are forced to figure out just how much pain they can take.
To dig up some of these unloved stocks that have been defying naysayers, I'm turning once again to The Motley Fool's CAPS community. Each of the companies below had been given a one-star rating (the lowest) by our community of investors just 30 days ago:
|
Stock |
30-Day Return |
One-Year Return |
Current CAPS Rating (out of 5) |
|---|---|---|---|
|
Clearwire |
33.3% |
N/A |
** |
|
Research Frontiers |
31.7% |
165.7% |
* |
|
Access Integrated Technologies |
24.8% |
(15.7%) |
** |
|
Seabridge Gold |
24.8% |
83.5% |
** |
|
General Motors |
22.7% |
47.9% |
* |
|
Hertz Global Holdings |
21.5% |
N/A |
** |
|
Top Tankers |
21.1% |
15.6% |
** |
It's important to remember that some of these stocks, particularly the smaller, more volatile ones, could just as easily reverse these big gains over the next 30 days. In some cases, though, the strength could be a sign that the prospects for the company have changed for the better, or that it had been beaten down just a little too far.
So the question with these stocks is: Are they better than CAPS players had thought, or are they just singing that proverbial swan song? The best way to get a feel for where these guys are headed is to dig in and do some research. I thought I'd kick you off with some thoughts on Clearwire.
The clear alternative
No, I'm not talking about Crystal Pepsi.
For those not familiar with the company, the "clear wire" in Clearwire refers to the fact that the company delivers broadband Internet access to its customers wirelessly. Clearwire's services are competitive with the DSL service customers can get through phone companies like Verizon, the cable Internet they can get through providers like Comcast, or the cellular Internet access that Sprint and others offer.
The company launched its first network in 2004, and at the end of the first quarter of this year, its services were available to more than 10 million customers in the U.S. and internationally. At the same date, the company claimed 258,000 actual subscribers.
Revenue has grown very quickly, jumping from just $15 million in 2004 to more than $100 million in 2006. Operating expenses, though, have grown even faster, to $338 million in 2006 -- leading to a $238 million operating loss. And, as the company points out in the risk factors of its March IPO prospectus, it expects to continue to take losses for the foreseeable future.
But we're here to explore what has sent the stock shooting up over the past month. To answer that, you need not look any further than the company's June 14 announcement that it had signed a distribution agreement with satellite TV providers DIRECTV and EchoStar. The agreement will obviously give some extra firepower to Clearwire in marketing its service, but it will also allow all three companies to offer video, Internet, and voice bundles that will compete with similar offerings from the likes of Comcast.
On CAPS, the stock has recently seen a little more positive sentiment thanks to the distribution agreement. One investor, HairyEights, remarked that "broad-cast Internet connectivity is in its infancy. [Clearwire chairman Craig McCaw] has always been one step ahead of the rest in telecommunications."
Others have stayed negative since the time of the IPO. Because of the stock's price and the company's losses, CAPS player wharrington has called the stock "Vonage part 2." Allstar13913 also points out that competition will likely be tough on Clearwire, and he thinks that right now the stock is "just speculation of the next big thing."
So is Clearwire going to make it big? Or is it going to continue chewing up investor capital without ever creating positive returns? Head over to CAPS and let the community know what you think. While you're there, you can start your research on any of the other stocks listed above -- or any of the 4,700-plus stocks on CAPS.
More CAPS Foolishness:
Fool contributor Matt Koppenheffer didn't see these particular moves coming, but he's rarely surprised at Mr. Market's general tomfoolery. You can check out Matt's CAPS portfolio here, or visit his blog. He does not own shares of any of the companies mentioned. The Fool's disclosure policy is never going to give you up, it's never going to let you down, and it's definitely never going to run around and desert you.
