When a stock's share price is lower than the mercury in 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 has made that move up.
Taking the market's temperature
But Motley Fool CAPS' proprietary ratings, aggregated from the opinions and accuracy of 165,000-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 recently enjoyed a bump in investor confidence and see whether they're truly heating up -- or headed back to the deep freeze.
|
Company |
Recent Price |
EPS Estimates (This Year -Next Year) |
|
|---|---|---|---|
|
Capstone Turbine |
*** |
$1.01 |
($0.10) - $0.01 |
|
Fuel Systems Solutions |
*** |
$26.29 |
$2.33 - $2.00 |
|
Network Engines |
*** |
$2.76 |
$0.08 - $0.13 |
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 CAPS members are taking notice of these stocks, maybe we should, too.
Caution: Contents may be hot
Capstone Turbine makes small energy plants, powered by multiple sources of fuel, which can be used on individual buildings to provide some or all of their energy needs. Now the mini power plant maker is getting into the hybrid electric vehicle business and will provide electric drives through a partnership with CalMotors. They'll be redesigning Parker Hannifin's industrial motor drive products for use in small-to-mid-size automobiles on up to Class 8 tractor-trailer trucks.
CAPS All-Star coralbro writes that the new opportunities offer a chance for Capstone to excel.
a good alternative energy play, and in my opinion, on the verge of making a profit. With recent expansions into new markets, as well as the increase in orders received, this company is about to break out.
Although it stumbled a bit as it reported a larger fiscal fourth-quarter loss on lower-than-expected revenue, management says the 40% increase in backlog to $86.3 million indicates Capstone's growth potential.
A real stem-winder
The hybrid engine vehicle market is also driving Fuel Systems Solutions, which makes components that allow cars to run on natural gas. Like rival Westport Innovations
CAPS member AlbertaBorn says that as the hybrid engine vehicle industry progresses, Fuel Systems Solutions will be ripe for the picking.
These guys are growing like a weed. And like one, sooner or later they're going to be plucked, but seriously, their revenue growth is huge and margins are shrinking. With a 100% sales increase over last Q1, they are poised to triple last year's revenue. I don't know why this stock is so low right now. Granted, the industry is a little shaky as far as alternative energy vehicles, but in smaller markets where lithium is expensive or unattainable, they stand to continue to make wads of cash.
Not so threadbare
Network Engines won't be powering any fancy electric cars from Tesla Motors; rather, it stays hidden behind the scenes, providing application platform solutions to original equipment manufacturers and independent software vendors who resell them and support them under their own brand names.
Its biggest customer is EMC
Of course, they should keep in mind the risks in having its sales concentrated in just one or two customers. Although Network Engines sells products to more than 150 companies, EMC and Tektronix account for almost half of its revenues.
Checking the mercury
Are these stocks invitingly warm or bitterly frosty? It pays to start your research 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. It's free to sign up.
