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 160,000-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)

Boyd Gaming (NYSE: BYD)

***

$11.26

$0.32 - $0.42

KKR Financial (NYSE: KFN)

***

$8.55

$1.48 - $1.61

Pacific Capital Bancorp (Nasdaq: PCBC)

***

$2.88

($0.75) - NA

Source: Motley Fool CAPS.
NA = not available.

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. 

Are you in a gambling mood?
Nevada was one of the hardest-hit states in the recession, and the rate of foreclosures still tops the nation according to RealtyTrac. (One in every 33 homes received a foreclosure notice in the first quarter.) But the actual number of properties receiving a foreclosure notice in Nevada dropped 16% from last year, one of the sharpest declines experienced, and a marked contrast to the increases seen in many other places.

So it's not just America that's back, as Newsweek's cover recently proclaimed (shudder!), but perhaps Nevada is turning a corner, too, as gaming revenues on the Las Vegas strip soared 33% in February. Boyd Gaming's shares have broken out, surging 29% over the past month, outperforming Las Vegas Sands (NYSE: LVS) and MGM Mirage (NYSE: MGM).

We'll see whether Boyd Gaming was able to turn around a 9% drop in fourth-quarter revenue when the company reports first-quarter results in a couple of weeks. Las Vegas Sands reported a 21% jump for the end of last year, so it might see an even bigger jump. Maybe not, though. MGM just released preliminary results for the first quarter showing a 4% decline in revenue.

CAPS member entragods anticipates a better performance by Boyd: "A stabilizing housing and job market would benefit [Boyd] in both sense. This is a stock for the long run."

Back again
That whole "America's Back!" thing is apparently helping KKR Financial, too. Its stock-in-trade is corporate debt, and the easing of the financial crisis and improvements in the economy have led to a nice resurgence, resulting in stronger investment gains by the private equity firm in its last reported quarter -- a $2.1 million profit compared to a $1.2 billion loss a year ago.

CAPS member Tali3sin says a continued recovery ensures that KKR will keep finding new investments to make: "Has performed consistently for me, huge opportunity for more business when economy recovers and has been paying dividend, what's not to like about it?"

Banking on recovery
As good as the recovery feels, it's important to note the undercurrents of disaster still roiling the waters. Regional bank Pacific Capital Bancorp showed narrower losses, but problem loans continue to drive elevated levels of net charge-offs. However, as the RealtyTrac numbers above indicate, we might easily see them start growing once again.

The FDIC has shuttered 42 banks already this year, compared to 140 in all of 2009. The financial condition of our nation's financial system is obviously still precarious.

But highly rated CAPS All-Star GREYGOLD thinks Pacific Capital has been through the worst of it and, should it survive, it ought to have a lot of upside potential:

This bank has seen some very rough times... I think that the worst is past and I'm in. There should be lots of upside long term here. I'm buying and holding. I started a large position at 1.28 in real life.

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.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.