4-Star Stocks Poised to Pop: American Capital

Based on the aggregated intelligence of 145,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, business development company (BDC) American Capital (NASDAQ:ACAS) has earned a respected four-star ranking.

With that in mind, let's take a closer look at American Capital's business and see what CAPS investors are saying about the stock right now.

American Capital facts

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.

On CAPS, 95% of the 2,044 members who have rated American Capital believe the stock will outperform the S&P 500 going forward. These bulls include mindfullone55 and jabifool.

Late last month, mindfullone55 tapped the stock as a particularly timely turnaround play:

If [American Capital] can dodge the pile of short-term debt due, then it has a great chance at getting to a more respectable price. It is priced low probably because of this looming debt, check back around early Jan. to see how it is doing. The book value is just too good not to watch!

In a pitch from two weeks ago, jabifool follows that bullish line of thinking:

[American Capital] is currently (12/18/09) trading at about 34% of book value, primarily due to concerns re: its covenant breach capital lenders…Given the company very reasonable management of its assets, the persistent demand for its product (lending to mid-market companies, with a general ability to generate reasonable cash flow) there's a good chance for the stock price to double or more, once the company achieves the desired restructuring of its debt with it creditors.

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