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 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.
There is a tool that offers a variety of resources to help find 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 115,000-plus CAPS members 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) |
|---|---|---|
|
Corning (NYSE:GLW) |
4.6 |
***** |
|
Precision Castparts (NYSE:PCP) |
11 |
***** |
|
NVIDIA (NASDAQ:NVDA) |
13.3 |
***** |
|
3M (NYSE:MMM) |
13.3 |
***** |
Data and star rankings from CAPS. All data as of Sep. 26.
Corning
With a 150-year history that includes supplying the glass for Thomas Edison’s light bulb, Corning knows glass. Today, the firm's products span several industries, with the fastest growth coming from display technologies encompassing LCD glass screens that compete with conglomerates such as 3M and Tyco (NYSE:TYC).
Corning’s shares got creamed earlier in the month after it cut revenue guidance by 5% for the third quarter as oversupplied LCD makers cut back on orders. Even with the drop, though, many investors see a great buying opportunity in a company with solid long-term fundamentals. More than 97% of 2,831 CAPS members rating Corning expect the company to outperform the market.
Precision Castparts
Providing precision fasteners and cast parts to a diverse industrial market, Precision Castparts has enjoyed great growth over the past five years, with the stock returning about 345%. The strong fundamentals underlying the company look even better today with shares down more than 40% this year, and the latest pessimism coming from customer Boeing's union worker woes.
With long term earnings growth estimated to be 16.5%, Precision is sitting squarely in value-land with a forward earnings multiple of only 8.4.Considering the wide disparity in expectations, more than 97% of the 1,072 CAPS members rating Precision Castparts expect it to beat the market.
NVIDIA
There are probably few places -- if any -- where you've seen high-end graphics chip maker NVIDIA mentioned in the same space as "value stocks." But a more than 70% drop in the stock tends to change things. The explosion that sent Nvidia south -- actually an earnings warning -- hasn't really changed the fundamental strength of the company.
Nvidia powers a wide array of high-end PCs, gaming systems, and even Apple's (NASDAQ:AAPL) Mac Pro. And with a hefty $1.6 billion on the balance sheet, NVIDIA has the financial and technical arsenal to go after other market segments, such as its new line of Tegra mobile chips that will go head to head with Intel (NASDAQ:INTC). Many investors see the growth prospects and cheap price as an obvious play now, and nearly 96% of the 3,916 CAPS members expect NVIDIA to outperform the market.
3M
In contrast to what many other companies are saying, 3M CEO George Buckley says his company’s businesses are strong and getting stronger. The $47 billion company has nearly a 33% return on equity, with a diverse product mix ranging from medical wraps to roofing granules. The company has also proven successful in many areas of the world, offering even more stability in times of increased market volatility. Though the diversified conglomerate may be on the boring side of investing, CAPS investors like the mundane these days. Nearly 97% of the 3,255 members rating 3M give it the thumbs up.
Let 115,000-plus members 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.
Run your favorite factors through the Motley Fool CAPS screener. It's totally free, and even fun!
On Oct. 7, 2008, Fool Co-Founder David Gardner and his Motley Fool Pro team will invest $1 million in a portfolio designed to help you make money in any market. In the coming weeks, the team, relying heavily on proprietary CAPS "community intelligence" data, will establish long and short positions in a broad range of securities, including common stocks, publicly traded put and call options, and exchange-traded funds (ETFs). To learn more about Motley Fool Pro and to receive a private invitation to join, simply enter your email address in the box below.
