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 and track investor sentiment 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.

Source: 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 pay attention, too. 

The sun's always shining somewhere
Like the old Soviet newspaper Pravda, the Sanskrit meaning of Satyam is "truth," yet in certain contexts, both seem to stand that definition on its head. While the old news organization rebuilt itself after the fall of communism in the Soviet Union but continues now as a shell of its former self, Satyam Information Services is also seeking to rebuild itself out of the rubble left behind by its CEO's admission of having cooked the books.

The Indian government has cleaned out the executive suite, directors have resigned, and inquiries are under way to understand just how such a fraud was perpetrated. Yet the IT-outsourcing giant has many of its old clients still with it, including Microsoft (NASDAQ:MSFT) and General Electric (NYSE:GE), and the government announced that Satyam has returned to "financial stability" only a month after its collapse. It is also trying to find a suitor for the troubled company.

CAPS member exodus69 thinks Satyam's client list is its real asset and that the Indian government won't allow the IT outsourcer to fail: "Company is fundamentally sound in its business delivery; most if not all of its major clients are willing to stick around; highly skilled employees are still loyal to the company; stolen assets most likely will be recovered and given back to Satyam; major class-action suits shall be dropped once the bidding war for buyout among the long lists of interested suitors brings the price back up to the level before Raju's scam; and Indian government has too much pride to allow the failure of Satyam -- they will do everything in its power to see through it that the company survive this mess and prosper again eventually."

Meanwhile, back on the homefront, the mayor of Las Vegas took affront to President Obama's comment that businesses should not spend their bailout money in Sin City. Noting that the hospitality industry is a business, too, the mayor underscored how hard casinos and hotels are feeling the pinch of the recession. Scientific Games has been down on its luck these days, too, as the casino equipment company feels the cutbacks its customers make. However, its lottery division may hold a ray of hope if people decide to play these games more as a means of surviving the downturn.

That's the thinking behind top-rated CAPS All-Star member msftgev's rating of Scientific Games an outperform last month: "Sad but true. People buy more Lottery Tickets during a Recession."

Shine your starlight
So are these stocks driving ahead or ready to crash? It pays to start your 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. 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?