Some companies are obviously great investments -- in hindsight. 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
The data shows that stocks achieving five-star ratings on Motley Fool CAPS have outperformed the market by 12 percentage points and that newly minted five-star stocks represent your best opportunity to capture those returns. So let's sift through the proprietary ratings system and find those stocks heading toward superstardom. Here are a handful of four-star companies approaching greatness.
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Intrepid Potash
(NYSE:IPI) -
MF Global
(NYSE:MF) -
Hecla Mining
(NYSE:HL) -
Minefinders
(NYSE:MFN) -
NorthStar Realty Finance
(NYSE:NRF)
Some of these names might surprise you. Silversmith Hecla Mining, for example, has been a premier name in mining for some time. Almost great? Even familiar names can still offer some of the best opportunities. Perhaps we've just forgotten the potential they still hold. However, the 115,000-plus CAPS investors chose these companies as less obvious sources for tomorrow's great buys, so let's see why they might merit your attention.
In the presence of greatness
The boom in potash production caused Foolish wag Toby Shute to call it a "Potashapalooza" earlier this summer, when he predicted that even at its IPO, Intrepid Potash was an overpriced play. With the market since straightening the mispricing out -- Intrepid shares are some 27% below the IPO, and Mosaic
Considering the meltdown in the financial markets, it's not surprising that shares of MF Global seem to closely resemble one of Salvador Dali's melting clocks. The derivatives broker has suffered through its share of earnings issues and personnel problems at a time when the markets haven't been kind to the type of exotica the Motley Fool Global Gains recommendation typically deals in. That doesn't deter some CAPS members, though: colonelnelson finds the business operations stable, regardless of what the shares are doing.
Despite the broker scandal, regulatory issues, and skeptical analysts, MF is not losing clients and is cutting costs. MF is on track to earn [$0.95] per share in fiscal 2008, and the shares are worth approximately 85% of MF's tangible book value.
A stabilized balance sheet and high level management should mean a [turnaround]. Outperform, over the next year. Hoping for 30% appreciation in share price.
The turnabout in the price of gold is a hopeful signal for Minefinders, where protests over the development of its Dolores mine in Mexico have delayed production schedules. Yet a number of mining companies have surmounted similar problems this year: Southern Copper
While there has been a slight delay in the start of production, this is a good company with great management. At this price it is a steal as they will be producing a lot of gold and silver at low cost [because of] their location in Mexico. Given that the fundamentals are still strong for the precious metals [Minefinders] will be making a lot of money in the coming years.
A great opportunity for you
These four-star investments are on their way to five-star greatness, and it pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page.
Sign up today for the completely free service, and let's us hear what you have to say about the great -- and almost great -- companies that interest you.
