5 Cold Stocks Heating Up

When a company's share price is lower than the temperatures in North Dakota in February, investors tend to give it the cold shoulder. But as the market warms to a company's prospects, its price can heat up in a hurry. Alas, you can rarely tell that a stock is melting investors' hearts until after it has made that move up.

Taking the market's temperature
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. Following a CAPS rating trend can help us determine the best time to invest. Let's look at previously rated one- or two-star companies that recently enjoyed a bump in investor confidence and see whether they're truly heating up -- or headed back to the deep freeze.

Source: Motley Fool CAPS.

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

Delivering change
Giving them a major ownership stake in Chrysler and General Motors (NYSE:GM) surely boosted unions and their supporters. Now, talk is that FedEx (NYSE:FDX) will be regulated through the National Labor Relations Board instead of under the National Railway Labor Act, which might make it easier for unions to organize at the courier.

If that idea does fly, CAPS member TexasPineapple sees United Parcel Service gaining ground as its rival confronts a cultural shift. "Recent congressional ruling in favor of properly categorizing [FedEx] workers (non-airway services) as non-railway employees will make UPS more competitive as [FedEx] deals with this change in culture, compensation & benefit demands."

The sun's always shining somewhere
Highlighting the insanity sometimes associated with investing, fellow Fool writer Rich Smith (a.k.a. CAPS All-Star TMFDitty) gave Canadian Solar a thumbs-down early last month because of seemingly crazy stock price movement: "Thumbs down across the sector for one reason and one reason only: No stock deserves to double in value in a matter of days based on a single, vague, announcement of government intent."

Yet Canadian Solar shares have as much as quadrupled over the past three months. A rather disappointing earnings report still helped it break through the clouds, though.

Do you know these guys?
It took a recession that basically beat everyone else in retail to a pulp to get Pep Boys to jump-start operations. Two years ago, Manny, Moe, and Jack were looking as though they were ready to either be bought out or hauled off to a junkyard. Today, amid the auto industry's woes, people are holding onto and fixing up their cars themselves, and Pep Boys' shares are up 74% year to date.

Back in mid-January, CAPS member expoiltthespread said these guys were insanely valued for being the only retail auto parts store that also offered services:

[Pep Boys] owns the real estate on 240 of its 540 locations, pays a 8% dividend [yield] and is in the process of a turnaround effort with a new management team. [Pep Boys] is the only company in the retail autoparts segment which offers installation, brake jobs and tires. people hold their cars longer in a poor economy, and buying tires and brakes is a non discretionary purchase. they have to do it. [T]hey have paid their debt down from $500 million to $300 million in the last year... The company has a $160 million market cap with sales of $2 billion per annum..its valuation is laughable.

Shine your starlight
So are these stocks moving forward or retreating? 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. It's free to sign up and post your thoughts, so why not use this opportunity to share your opinion?