Investors are always hunting for the next big stock -- the dream stock whose price increases several times over when the market finally discovers it. It's easy to look back and see what the 10 best stocks of the past decade were. But for my part, I'm more interested in the tools that can not only help me find new stock ideas, but also have the resources necessary to evaluate tomorrow's greatest companies.
One particular tool offers a variety of resources to help with finding tomorrow's leaders: Motley Fool CAPS.
We've enlisted CAPS to screen for top value stocks and get the story behind them. CAPS' nifty screener will help us find stocks with:
- A market cap of at least $1 billion.
- A long term debt-to-equity ratio of less than 0.5.
- A current ratio of at least 1.
- A price-to-earnings ratio of less than 15.
Then we'll tap the collective intelligence of our 110,000-plus CAPS investors to see whether these companies present real opportunities -- or whether the numbers fail to tell the true story.
Opinions with the numbers
Here's a sampling from the list of stocks our screen pulled up today.
|
Company |
P/E Ratio |
CAPS Rating (out of 5) |
|---|---|---|
|
Seagate Technology (NYSE:STX) |
6.4 |
**** |
|
Novartis AG (NYSE:NVS) |
10.5 |
***** |
|
American Eagle Outfitters (NYSE:AEO) |
8.1 |
**** |
|
Walt Disney (NYSE:DIS) |
14.2 |
**** |
|
Hewlett-Packard (NYSE:HPQ) |
14.5 |
**** |
Data and star rankings from CAPS. All data as of June 29.
Seagate
With high-definition (HD) content now becoming the norm for broadcasters, Seagate is answering the call for higher-capacity DVRs with the release of its one-terabyte storage capacity drive, which is compatible with Motorola's (NYSE:MOT) DVR line. And with demand for storing digital content booming, Seagate expects to take less than five years to ship its next billion hard drives. Couple this demand with a low P/E and a strong 36% return on equity at Seagate, and it's no wonder more than 94% of the 697 investors rating the company in CAPS expect it to outperform.
Novartis
Seeing plenty of opportunity for growth ahead, Novartis agreed to take a 25% stake in eye-care products maker Alcon, handing $11 billion to current Alcon owner Nestle this year. Novartis may potentially pony up another $28 billion for Nestle's other 52% ownership in the future. While its performance in the past five years hasn't been anything spectacular, Novartis has held up well against other drug giants like Pfizer (NYSE:PFE) and GlaxoSmithKline. With lots of drug opportunities in the pipeline, 96% of the 851 CAPS investors rating the company are bullish.
American Eagle Outfitters
The entire retail sector has been hammered lately, as consumers grapple with the sputtering economy. But many investors think the current market hangover is the perfect time to consider a proven business like American Eagle. The company has shown some deft management of inventory and expenses to help offset slowing sales, demonstrating that it has the right stuff to deal with the good and the bad. A significant group of CAPS investors agree, with 2,450 of the 2,566 investors rating the company remaining bullish.
Disney
With the success of tween hits like Hannah Montana and High School Musical, Disney expects licensed merchandise sales to reach a massive $30 billion this year. Coupled with the $4.3 billion in free cash flow that Disney has generated in the past 12 months, many investors see the stock as the happiest place on earth. In CAPS, Disney holds a four-star rank; more than 92% of the 3,298 investors who've rated the company believe it will outperform the S&P going forward.
Hewlett-Packard
As consumers and businesses become less reliant on printing, HP is taking steps to make its printing operations more efficient. And since the world's largest PC maker earns 11% margins on its services business (more than twice its PC margins) the company is hungry to expand its IT business, as evidenced by the planned purchase of IT service provider EDS. In CAPS, you can check out all the reasons why 2,178 investors advise going long on HP.
Let 110,000 investors be the judge
The collective wisdom of a huge pool of investors can help give context to a page of numbers developed through a stock screen. But even with an entire community of qualified opinions acting as the judge, individual investors are still the jury and should perform their own due diligence.
You can run your own favorite parameters through the CAPS screener for free. Then give your own opinion -- either good or bad -- on any company you wish in Motley Fool CAPS.
