Some companies are obviously great investments -- in hindsight. Sure, we should have bought Starbucks at its IPO and earned hundredfold returns over the years. Yet for every stock out there screaming "buy me," others simply give us a nudge and a nod. How can we tell tomorrow's obviously great investments from the thousands of pretenders?
The stars' walk of fame
On Motley Fool CAPS, these opportunities can be found among our four-star stocks. In CAPS' proprietary ratings system, they rank higher than most of the other 5,300 starred companies, but they're just shy of superstardom. While all the attention might be focused on their five-star peers, we can sift through CAPS to find four-star firms approaching greatness:
Some of these names might surprise you. Boeing, for example, isn't exactly a hidden corporate name; it competes for world dominance against Airbus maker EADS. Yet sometimes, the most familiar names can offer the best opportunities, if only because we've begun to take their potential for granted. The 79,000 CAPS investors collectively chose these companies as less-obvious sources for tomorrow's great buys. Let's see why they might merit your attention.
Taking a bite
There's a world of people out there who continuously underestimate Apple's potential, and for a good part of the past decade, I was one of them -- if not outright dismissing the company's products, at least dismissing the potential of its stock. And even with its shares bumping up against -- and briefly breaking through -- the $200 mark, there are people who still underestimate the possibility that it can go higher. However, some Fools think $200 is just the beginning.
There are simply too many irons getting hot in the fire to discount Apple's potential. The ubiquitous iPod is, of course, a given, and computer sales continue to impress. Yet it's the next level in technology that has believers, well, believing. The success of Apple's iTunes music store will now be used to distribute movies in a video rental deal with News Corp.'s
Top-rated All-Star ddberg, with a 98.73 player rating, thinks Steve Jobs benefits greatly from Apple's devoted customers:
Was a huge bear on this company, as I figured the Jobs/options issue would have SOME kind of negative impact on the company, and the incredible momentum of the stock/brand would at some point begin to weaken. But it appears Jobs is untouchable. And these guys are extremely good at what they do in the world of consumer electronics. In fact, I can't think of another company -- past or present -- that has as ravenous a fan base as AAPL. The only comparable I can come up with is Oprah, with her devoted followers who jump when she says jump. And I used "fan base" two sentences ago intentionally. Apple devotees, while obviously users of Apple products (iPods, iTunes, iMacs and iPhones) are more so rabid fans of the company, brand and stock.
In his top bull pitch for Apple, All-Star millionairefools enumerates the reasons why Apple's technology has so many outlets of expression, some not yet imagined:
Here's ... where the market and I depart ...
I don't think iPhone is a product. This is a platform for things to come. The closest example is Windows software-a platform on top of which Microsoft sells Office suite, Anti-virus and a host of other add-ons to make the platform product more valuable.
I think iPhone is another "platform product". Products that can easily spawn off iPhone are...
(1) iPhone Mini : iPhone without the iPod-once iPhone market is all soaked up, they can release this with ease and this will be bigger than Razr
(2) iPhone Foto : iPod with a 5MP camera with stellar image controls-not quite Carl Zeiss, but good enough for most of us
(3) iPhone GPS : Once battery strength becomes better and storage easier, this will be a Garmin killer
(4) iPhone Book Reader : Apple can start selling fold-able screen as an accessory (though I admit, this will take 2-3 years to build) and Sony Reader will be snuffed in its infancy (just like its Sony Music platform)
A great opportunity for you
That's the bullish word on Apple, but do you agree? Are these four-star stocks still investment-grade material? On Motley Fool CAPS, your input can influence how stocks are rated. Be a star-maker. Sign up today. It's free.
For every post you make to CAPS or any Foolish discussion board in the month of December, The Motley Fool will donate $0.02 to charity. So give us your 2 cents and we'll pay it forward!