Think of investor sentiment as a pendulum that swings in tandem with a company's share price. When investors begin to think highly of your company, its stock might also start heading in the right direction. Alas, you can rarely tell when investors are warming to a stock until after it's made that upward swing.

An astrolabe for investors
But Motley Fool CAPS' proprietary ratings, aggregated from the opinions and accuracy of 120,000-plus members, offer a great way to monitor investor sentiment. Like astronomers scanning the skies, investors can follow a stock's stars through its CAPS rating trend, tracking investor sentiment to help determine the best time to invest. Data suggests that CAPS' highest-rated stocks performed best while the lowest-rated did worst, so let's look at previously rated one- or two-star companies that have recently enjoyed a bump in investor confidence and see whether the stars are really aligning in their favor.

Company

CAPS Rating (out of 5)

Recent Price

Next Year’s EPS Growth Estimate

AK Steel (NYSE:AKS)

***

$6.21

(39%)

BCE (NYSE:BCE)

***

$26.95

(3%)

Echelon (NASDAQ:ELON)

***

$5.40

19%

Lions Gate Entertainment (NYSE:LGF)

***

$5.73

200%

Navistar International (NYSE:NAV)

***

$17.41

(22%)

Sources: Motley Fool CAPS, Yahoo! Finance.

Obviously, this is not a list of stocks to buy -- just a starting point for further research. Yet if some of the best investing minds are taking notice of these stocks, maybe we should too.

The sun's always shining somewhere
If you want to look for a silver lining in this recession, then you might want to consider the massive public-works projects the incoming administration may unleash to jump-start the economy. Whether it will actually work or not is, of course, debatable, but CAPS member unibeats sees companies like AK Steel as uniquely positioned to be a beneficiary:

I can see this company bouncing up. The Obama administration is likely to take control the way Franklin Roosevelt did forming his New Deal era and fund large infrastructure expansion/repair.

So to build dams, roads, bridges, and sewer systems, the nation will need a strong steel supply, and [AK Steel] is poised to take charge. It is a US corporation, and Obama has stressed contracting US companies so that not only the industry itself will grow but it would end up employing US citizen workforce instead of a foreign one.

The trucking industry has taken a beating in this economy (along with pretty much everything else), and CAPS member bscheets thinks that when you compare Navistar International to PACCAR (NASDAQ:PCAR), for example, it comes up short. Yet as the company realigns its business and looks to international expansion and greater military contracts, bscheets thinks a number of factors point to a rebound, including a joint venture with Caterpillar (NYSE:CAT):

They've had terrible earnings vs. revenues; so bad, I can't see them not improving. Historically not the premier mfg (e.g. vs [PACCAR]), but seem to have improved their reputation. ... [L]ower gas prices will help the trucking industry more overall. Military sales a plus, but I don't think that's the story or reason to buy. As with a lot of industries, the growth opportunity is developing countries... Still, this is fairly high risk. I've never seen a stock with negative book/sharholder equity. I THINK it's undervalued, based on P/S in good times and opportunity for improvement, but debt is another factor.

Shine your starlight
So are these stocks driving ahead or ready to crash? It pays to start your research 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. Then weigh in with your own thoughts on which stocks you think are shooting stars or supernovas. Since it's free to sign up and post your thoughts, why not use this opportunity to take your star turn?

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Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.