When a stock's share price is lower than a North Dakota thermometer in February, investors tend to give it the cold shoulder. But as the market warms to a stock'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's made that upward leap.
Taking the market's temperature
But Motley Fool CAPS' proprietary ratings, aggregated from the opinions and accuracy of 145,000-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 have recently enjoyed a bump in investor confidence and see whether they're truly heating up -- or headed back to the deep freeze.
|
Company |
CAPS Rating (out of 5) |
Recent Price |
EPS Estimates (This Year-Next Year) |
|---|---|---|---|
|
Conseco |
*** |
$5.50 |
$0.87-$0.69 |
|
Geron |
*** |
$6.28 |
($0.76)-($0.83) |
|
Golden Star Resources |
*** |
$3.45 |
$0.03-$0.25 |
|
Integrated Silicon Solution |
**** |
$5.54 |
$0.19-$0.40 |
|
Mindspeed Technologies |
***** |
$5.20 |
$0.13-$0.38 |
Source: Motley Fool CAPS.
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.
Caution: Contents may be hot
Small cap biotech Geron is starting off the new year right with investors who've raised the stem cell researcher's CAPS rating to a mid-tier three stars. With advances not only in its stem cell wheelhouse showing positive results -- Geron's drug candidate imetelstat recently showed that it inhibits the activity of brain cancer tumors -- it's also showing positive developments in its vaccine research.
GRNVAC1 is being developed to help prolong remission of acute myelogenous leukemia. Data presented at the American Society of Hematology's annual meeting last month suggested the phase 2 trial drug may be helping patients remain cancer free, while achieving its endpoints of safety and tolerability.
CAPS member end2war is one of those who finds Geron's multipronged approach a winning combination worthy of the upgrade it's received:
This development stage biotech has developed a major position in two related fields, cancer drugs based on tolermerase, and regenerative medicine based on embryonic stem cell drugs. It has a large patent portfolio in both fields, and it has stage I and II trials in both areas that are advancing nicely.
Stem cell researchers in general have suffered recently. Geron's stock was down 15% over the past six months, StemCells
Dialing up reality
Supplemental health and life insurer Conseco continues its ascent from the depths of near-bankruptcy to rising CAPS star. Despite general weak earnings results that have suffered from pressures on its investment portfolio, Conseco looks like it's working diligently to improve its financial position. Just last month it raised about $223 million in a stock offering where it was using three quarters of the proceeds to pay down debt.
Super smart hedge fund manager John Paulson, who made a mint betting on the housing market collapse, has established a sizeable stake in the insurer, and one of Conseco's directors made a $1.9 million market purchase of shares just before Christmas. Those were two of the reasons CAPS member checklist34 used to determine the insurer was a top investment for 2010:
CNO. Conseco, a company that John Paulson of hedge fund fame has taken a stake in. CNO is profitable, and is priced at around 1/2 of book value. They have made enormous progress towards resolving the financial problems that sent the shares under $1 earlier in the year. With a foward p/e of 6 and a price/book of well under 1, CNO is very cheap. A director recently bought $2 million worth of stock.
Checking the mercury
Are these stocks invitingly warm or bitterly frosty? It pays to start your 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. Then weigh in with your own thoughts on which stocks you think are hot little numbers, and which offer cold comfort. It's free to sign up.
