"If I have seen further than others, it is by standing on the shoulders of giants."
-- Sir Isaac Newton
There's a reason why more than 35,000 investors flock to Omaha, Neb., every May, and why millions more rummage through the Berkshire Hathaway annual reports. Gleaning knowledge from proven investors is one way to find the stocks that will make you rich.
Using Motley Fool CAPS, the Fool's 147,000-plus-member investing community, we can see which stocks got a boost in attention from proven investors in the past month.
In addition to a stock's CAPS star rating, a sudden increase in bullish interest from CAPS members ranked in the top 20% of the community -- we call them CAPS All-Stars -- is a very good sign, one you should take note of.
Conversely, a sudden increase in bearish interest from CAPS All-Stars might be an early signal that the stock's one to avoid.
A bullish stampede
To illustrate, here are five stocks receiving more support from CAPS All-Stars over the past four weeks:
|
Company |
Industry |
Change in All-Star Bulls |
CAPS Rating |
|---|---|---|---|
|
Chesapeake Energy |
Energy |
+285 (17% gain) |
***** |
|
General Electric |
Conglomerates |
+245 (8% gain) |
**** |
|
Transocean |
Energy |
+238 (16% gain) |
***** |
|
Citigroup |
Financial |
+210 (16% gain) |
*** |
|
Ford |
Automotive |
+207 (19% gain) |
** |
Data from Motley Fool CAPS as of Jan. 10, 2010.
The resurgence of Ford has made a lot of headlines recently, including here at the Fool, as it grew annual market share for the first time since 1995 and is flying past its main American competitors, General Motors and Chrysler. Despite renewed bullishness on Ford shares, the CAPS community as a whole still rates it with just two stars. Following last year's Cash for Clunkers program that provided incentives for car buyers, CAPS members may be waiting to see how Ford does without that artificial stimulus before they're ready to jump on the bandwagon.
When bears attack
Now that we've seen which stocks CAPS All-Stars think are poised to pop, here are five stocks saddled with a greater number of "underperform" ratings over the past month:
|
Company |
Sector |
Change in All-Star Bears |
CAPS Rating |
|---|---|---|---|
|
ICx Technologies |
Technology |
+29 (725% gain) |
* |
|
The McClatchy Company (MNI) |
Publishing |
+24 (49% gain) |
* |
|
Radio One (ROIAK) |
Broadcasting |
+23 (72% gain) |
* |
|
Origin Agritech (SEED) |
Agriculture |
+23 (25% gain) |
* |
|
UAL Corporation |
Airlines |
+23 (20% gain) |
* |
Data from Motley Fool CAPS as of Jan. 10.
The biggest standout in this group is ICx Technologies, a developer of sensor technologies for homeland security. It's attracted a lot more investor attention following the terrorism scare on Christmas Day in Detroit -- daily volume on ICx shares went from just 4,700 on Dec. 24 to 12.6 million on Dec. 31, and shares are up some 66%. CAPS investors appear to be skeptical, however, fearing these gains may be due to passing excitement.
What to do next
Knowing when stocks are poised to change direction requires thorough fundamental analysis and a keen sense of changing conditions. Missing either of these key ingredients could lead you into a very bad investment, particularly if you short the stock.
At our new Motley Fool Pro service, which will be reopening next week, we'll continue to stand on the shoulders of proven investors, using similar proprietary data points and our own thorough fundamental analysis to identify promising investment opportunities. Our ultimate goal is to help subscribers make money, whether the market is up, down, or flat, by going long and short using stocks, options, and ETFs. If you'd like to learn more about Motley Fool Pro, simply enter your email address in the box below.
