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 5,400 starred companies, but they're just shy of superstardom. While all the attention might be focused on their five-star peers, we can sift through CAPS to find four-star firms approaching greatness. Here are a handful.
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American Capital Agency
(Nasdaq: AGNC) -
Gulf Resources
(Nasdaq: GFRE) -
IBM
(NYSE: IBM) -
MercadoLibre
(Nasdaq: MELI) -
SciClone Pharmaceuticals
(Nasdaq: SCLN)
Some of these names might surprise you. IBM, for example, has been a recognized business technology leader for decades. 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 150,000-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?
Since gaining Nasdaq listing last November, Gulf Resources has been busily plying its trade of producing bromine, a key resource used in oil and gas exploration, fire retardants, and the manufacture of chemicals. The China-based company also recently began construction of a new chemical additives production line for wastewater treatment.
The stock, which soared from penny stock status to over $14 a share, has given back about a third of the gains since it hit those highs in January. Investors are viewing the new lower price as a buying opportunity, as it is hard to discern that much has changed in its business since then. CAPS member sternworm wrote late last month that it might stem from concerns about China generally:
China has been getting walloped lately but this stock was just at its 52 week high a couple of weeks ago (14.94). It has been dropping ever since. Nothing is wrong with the company that I can see.
There could be something to that. Over the past 30 days, the 252 stocks that comprise CAPS' China sector are off an average of 3.6%, including stocks like Ctrip.com
On the shoulders of giants
Another company trying to break free is SciClone Pharmaceuticals, whose shares are on the upswing after having been cut by a third or more since its 52-week highs. Results from a recent study look promising, because its vaccine-booster Zadaxin -- when used in combination with a swine flu vaccine from Novartis
SciClone recently announced that a second round of testing reiterated those findings. Some 93% of patients receiving a low dose of Zadaxin showed an immune response, while 94% of patients receiving a bigger dose did.
The biopharmaceutical is flying under Wall Street's radar, as only a couple of analysts follow it, but it's also escaped the notice of many in the CAPS community; fewer than 100 members have rated it. Of those, 91% see it outperforming the broad market averages. Head over to the SciClone Pharmaceuticals CAPS page and let us know you're not immune to giving a response on its potential.
A great opportunity for you
Investor sentiment suggests these four-star investments 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.
