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 posting anonymously to online message boards.
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) |
|---|---|---|---|
|
Raser Technologies |
66.2% |
47.2% |
* |
|
Sterling
Financial |
59.4% |
(20.5%) |
* |
|
Crocs |
40.0% |
318.2% |
** |
|
Cell Therapeutics |
31.2% |
(20.4%) |
* |
|
Phoenix
Technologies |
25.4% |
116.0% |
** |
|
DryShips |
25.2% |
395.7% |
* |
|
Princeton
Review |
22.5% |
12.2% |
* |
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 a few of these stocks.
The usual suspects
Some low-rated stocks flare up, find their way onto this weekly list of unloved outperformers, then disappear. Here today, gone tomorrow.
But some of these one-star champs seem to show up over and over again. Like that friend who comes over to stay for "a week or so" and then doesn't leave, these stocks hang around seemingly defying all logic (and hospitality). Though they may not drink your milk directly from the carton, these stocks have found other ways to make some of the very best investors on CAPS look silly.
Three stocks listed above -- Raser Technologies, DryShips, and Crocs -- have all shown up a bunch of times in this column. DryShips and Crocs in particular, both with one-year gains of over 300%, have really taken it to the critics. Raser, the least loved stock of the three, has managed to pull its price change for the year into the black with its performance over the past month.
Despite the gains, though, many CAPS players are sticking with their calls. TMFEldrehad, for example, one of the very best on CAPS, has called both DryShips and Raser underperforms. Though he has had his thumb down on DryShips long enough to rack up a score of nearly -500, just last week he wrote a pitch reiterating his position on the stock and his dim view of the company's management. And in addition to players holding onto existing calls, new players continue to pile on both DryShips and Raser with the red thumbs.
Crocs, on the other hand, has actually been gaining popularity on CAPS. Over the past month, the stock has won over more CAPS players and edged its way up to two stars.
The stock was music to investors' ears last week. Even as the rest of the market sold off, Crocs notched impressive gains on a big second-quarter earnings number and a boost in guidance for 2007. Though there's still a healthy level of skepticism on CAPS, the stock looks like a bona fide blue chip when stacked against the likes of DryShips and Raser.
Of course, if Crocs does hang onto its two-star status, we won't be seeing it here again. Now if only I could get my friend to put down the milk carton and move out.
So do you think Crocs deserves its newfound second star? How about Raser and DryShips -- does the community have it all wrong on them? 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 4,900-plus stocks on CAPS.
More CAPS Foolishness:
Fool contributor Matt Koppenheffer didn't see these particular moves coming (particularly Crocs, which he called the worst stock for 2007), 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.
