Some companies are obviously great investments -- in hindsight. Yet for every stock out there screaming "buy me," others simply give us a nudge and a nod. How can we tell tomorrow's obviously great investments from the thousands of pretenders?
The stars' walk of fame
On Motley Fool CAPS, these opportunities can be found among our four-star stocks. In CAPS' proprietary ratings system, they rank higher than most of the other 5,300 starred companies, but they're just shy of superstardom. While their five-star peers get all of the attention, we can sift through CAPS to find some four-star companies approaching greatness. Here are a handful:
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GameStop
(NASDAQ:GME) -
Hansen Natural
(NASDAQ:HANS) -
Medarex
(NASDAQ:MEDX) -
New Gold
(NYSE:NGD) -
TD AMERITRADE
(NASDAQ:AMTD)
Some of these names might surprise you. GameStop, for example, has become the prime stop for gamers to buy, sell, and exchange video games. Almost great? Even familiar names can still offer some of the best opportunities. Perhaps we've just forgotten the potential they still hold. However, the 135,000-plus CAPS members chose these as less obvious sources for tomorrow's great buys, so let's see why these companies might merit your attention.
In the sight of greatness?
How much is a "wonder drug" worth to a company? If you're Medarex, it's as much as $212 million. That's the amount by which the biopharmaceutical's market valuation soared in one day, after the Mayo Clinic reported that two patients were cured in a clinical trial of the company's cancer-fighting drug ipilimumab. Medarex will market the therapy with Bristol-Myers Squibb
The news was published in what appears to be an in-house publication, so that might be cause for holding back on the enthusiasm. However, if Medarex had only ipilimumab to its credit, investors would be rightfully worried no matter what the prospects were for further testing. But Medarex might not be a one-drug wonder. It has several potential drugs in early stages of clinical testing, any one of which could be a hit.
It's that list that brings CAPS member DogDayAftern00n to the plate: "Fantastic pipeline potential; possibility that they will get bought out; looking for big moves in 4Q '09, 1Q '10."
The golden age
You might say it's a one-trick pony. After all, the only thing New Gold does is mine gold. But the junior miner is finding itself in a stronger position and on the upswing after adding the assets of Western Goldfields to its portfolio spanning Mexico, Canada, Australia, Brazil, Chile, and Alaska. Unlike gold producers such as Goldcorp
CAPS member stockfreak1 believes New Gold will quickly move up the ranks: "They have more than enough equity to be a major player. Debt is minimal."
Stocks making up the CAPS Gold tag have seen their shares drop by an average of 21% over the past year, poor enough to place it in the bottom third of all the tags in the CAPS universe. But there are also 10 big reasons why gold might be one of the best investments for your portfolio.
A great opportunity for you
Investor sentiment suggests these four-star investments still seem to be on their way to five-star greatness, but it pays to start your own 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.
Sign up today for the completely free service, and let's hear what you have to say about the great -- and almost great -- companies that interest you.
