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 five-star peers get all the attention, we can sift through CAPS to find four-star companies approaching greatness. Here are a few.
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Allied Irish Banks
(NYSE:AIB) -
EMC
(NYSE:EMC) -
Level 3 Communications
(NASDAQ:LVLT) -
Synaptics
(NASDAQ:SYNA) -
Yingli Green Energy
(NYSE:YGE)
Some of these names might surprise you. EMC, for example, has been the giant in network storage for years 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 145,000-plus CAPS members chose these companies as less obvious sources for tomorrow's great buys, so let's see why they might merit your attention.
In the sight of greatness?
Look for touchscreen specialist Synaptics to surge in the year ahead. Even its recent quarterly report, which showed profits falling by 23% because of one-time items, couldn't mask the potential for growth. Non-personal-computer touchscreen revenue rose by 39% in the quarter as the mobile business surged ahead.
Indeed, the world's second-largest mobile-phone handset maker, Samsung, says that 20% of the 200 million-plus units it will ship this year will be touchscreen devices, up from the 5% they comprised in 2008. They're expected to account for ever-larger percentages of sales in the future.
Of the 34 million Americans who own a smartphone, 70% of those devices have touchscreen capabilities. That figure explains how, according to comScore, sales of mobile phones with touchscreens grew by 159% last year. One-third of those touchscreen-capable smartphones came from Apple
Importantly for Synaptics, its next generation of touchscreen technology is incorporated into the newest iPhones and will be spreading beyond just mobile communications, though that will still represent the bulk of the shipments. Analysts see the latest technology growing from fewer than 200,000 units in 2006 to more than 21 million by 2012.
CAPS member a2investments looks at how the market initially reacted to the earnings report and, coupled with the huge short interest on the stock, figures Synaptics is poised to explode.
leader in touch screens for mobile devices of all kinds. Hammered unjustly for a good quarter. Short interest of 40 plus percent puts a strong floor under this winner
a2investments did update his thinking to show that if anything has exploded, it's Synaptics' short interest, which now stands at 63% of outstanding shares. That alone suggests there's the potential for a short squeeze, so I'm heading over to Synaptics' CAPS page and rating it to outperform the market. Yet even without such pressure bubbling from underneath, I see the touchscreen technologist growing as a result of increased demand, and I urge you to join me there to share your thoughts.
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 us hear what you have to say about the great and almost great companies that interest you.
