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 130,000-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. 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.


CAPS Rating (out of 5 max)

Recent Price

Next Year EPS Growth Est.

athenahealth (NASDAQ:ATHN)




Churchill Ventures (NYSE:CHV)




Psychiatric Solutions (NASDAQ:PSYS)




TriQuint Semiconductor (NASDAQ:TQNT)




Weyerhaeuser (NYSE:WY)




Source: Motley Fool CAPS, Yahoo! Finance. NA = not available.

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
Money doesn't grow on trees, but during the housing boom, it sure seemed to for Weyerhaeuser. The company posted leafy profits of nearly $1.3 billion at its peak, on revenue that exceeded $21 billion. Now that we're in the trough of a recession, however, net income has withered and died, with the forest management company posting a $1.2 billion loss last year on sales that have plunged more than 60% from the boom years.

Where Plum Creek Timber (NYSE:PCL) is the largest private timberland owner in the U.S., with 7.4 million acres in 19 states, Weyerhaeuser owns or manages 22 million acres of timberland worldwide, for use in making wood products and for homebuilding. It sold off its containerboard segment to rival International Paper (NYSE:IP) last August, and it divested itself of its fine-paper business the year before.

Now, Weyerhaeuser's business is much more dependent on the housing market. Perhaps few people realize that Weyerhauser is also among the top 20 largest homebuilders in the country, closing on almost 3,200 homes in 2008.

With housing's fall, the price of lumber has also taken a hit, with many products selling for 33%-50% less than what they were fetching in 2004. As bad as the housing industry is, however, Weyerhaeuser also has the wherewithal to sustain itself through the harsh conditions. It has $2.4 billion in cash and short-term investments on its balance sheet and $4.2 billion in timberland assets to offset the $5.6 billion in long-term debt it carries.

Although Standard & Poor's recently downgraded the company's debt rating, it was Weyerhaeuser's attention to fiscal responsibility in a tough environment that kept S&P from taking away its investment-grade rating.

CAPS member Kickstart70 said last month that despite a number of factors working against Weyerhaeuser right now, it has the ability to stand firm like an oak against the storm:

Although Weyerhaeuser has a lot of things going against it right now, I think it's been beaten down further than is really warranted. It's followed the market down, but you still have to think that this is a 6 billion market cap company with widely diversified interests and has been quite stable until the recent market "correction" took everyone down. Once the housing market starts to improve I expect WY will exceed expectation on the way back up.

Weyerhaeuser's business is cyclical, which can mean that its business will turn before the general market. While the housing downturn began in earnest in 2006, Weyerhaeuser's metrics began to worsen earlier than that. Investors might want to take that into consideration when looking for a good entry point, as the upturn may come just when times seem the bleakest.

Shine your starlight
When you're seeking the best of the market's least loved stocks, 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?

The Fool owns shares and covered calls of Plum Creek Timber. International Paper is a former Motley Fool Income Investor selection. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor Rich Duprey also owns shares and options on Plum Creek Timber, but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.