Unloved Stocks Ready to Shine

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 125,000-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 to help determine the best time to invest. 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.

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
At least we can say that the high-tech industry is firmly behind the government's proposal to hand out hundreds of billions of dollars. CEOs from companies across the tech world, from Micron Technology to IBM (NYSE: IBM), met with President Obama recently in a bit of solidarity for his $819 billion stimulus package. But it's not the only bit of government largesse that Micron is trying to finagle. It met with the government of Taiwan recently to wrest some of the $3 billion that country is willing to shower on the chip industry. With a chip glut helping Micron to eight straight quarters of losses, it explains why the company doesn't want tax credits -- it has no income to offset! Better for these guys if you just give cold, hard cash.

CAPS All-Star HansHauge says that with the chipmaker hemorrhaging cash and a turnaround probably far off in the future, Micron Technology will continue to be punished: "[B]asically they posted a loss that was twice what was expected (and their shares fell from $2.61 to a whopping $2.59, yes a whole 2 cents...), they are bleeding through their cash like there's no tomorrow (probably because there isn't), and right now the market is terrible. I do not believe there will be any signs of a recovery for at least 18 months."

A general sinking feeling?
The slump in China started before the Beijing Olympics, but that extravaganza was seemingly the last hurrah for the nation's economy. VisionChina Media, an advertising network whose stock peaked at $25 a share just before the Olympics, has since crashed to $6 a stub. Fellow advertiser Focus Media (Nasdaq: FMCN) has also fallen from its heights, though its decline started well before the new year.

CAPS member AtomicMoleman believed last October that VisionChina faced problems far beyond a souring economy:

1. [Cutthroat] compeition: [VisionChina Media] recently lost subway Lines 1 2 in Beijing to Bus Online. Another competitor Towona is filing for an IPO via [Morgan Stanley] although I believe it will be nearly impossible for a second digital bus advertising company to go public in this market

2. Concession fees are getting higher while contract terms are getting shorter.

3. Management creditabllity -- so far Wall Street analysts have treated the CFO and CEO with kid gloves, but now there are some real questions as to the authenticity of the Company's revenues. This is a common problem with companies run by mainland local Chinese.

Shine your starlight
To figure out which of these stocks will shine the brightest, 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?