In the world of investing, extreme optimism about a stock is rarely a good thing. Overly enthusiastic investors can push a stock price beyond reasonable levels, creating more room for disappointment if these lofty expectations are not met.

Remember: Good companies are not always good investments. If everyone knows a company has excellent prospects, the price of the stock may already reflect this optimism, and the upside may be limited.

The following is a list of stocks seeing extreme optimism from Wall Street analysts, institutional investors, and options traders. Should you be concerned by this overwhelming consensus? Click here to access interactive tools to analyze these companies. As for the list of 10, here's what we're tracking:

  • Wall Street Analysts: The names mentioned here have extremely optimistic analyst ratings (ratings closest to 1 indicate a strong "Buy"). All of the stocks in this list have ratings between 1.0 and 1.3.
  • Options Traders: When options traders are bullish on a stock, they buy Call options. When they are bearish, they buy Put options. In other words, looking at the open interest of Put to Call options can give you a clue what options traders are thinking. The lower the Put/Call ratio, the more bullish options traders are on a company's prospects. All of the stocks in our lists have Put/Call ratios below 1.0 (i.e., bigger call option open interest than put option open interest).
  • Institutional Investors: Considering that institutional investors have smart people analyzing stocks all day long, it's probably a safe bet to invest alongside them. But problems may arise when they start selling. All of the stocks in our list have seen significant three-month changes in institutional ownership. (Data sourced from Reuters.com.)

Company

Analyst Recommendations

Put/Call Ratio

3-Month % Change in Inst. Ownership

Wabash National (NYSE: WNC)

1

0.46

129.23%

VanceInfo Technologies (NYSE: VIT)

1.2

0.61

24.44%

Iridium Communications (Nasdaq: IRDM)

1.3

0.55

16.92%

Gulfport Energy (Nasdaq: GPOR)

1.3

0.72

12.21%

Boise (NYSE: BZ)

1.3

0.12

10.59%

A. Schulman (Nasdaq: SHLM)

1.2

0.77

9.57%

Morningstar (Nasdaq: MORN)

1

0.88

7.01%

Emergent BioSolutions (NYSE: EBS)

1.2

0.74

6.66%

PriceSmart (Nasdaq: PSMT)

1

0.34

5.09%

Innophos Holdings (Nasdaq: IPHS)

1

0.67

4.70%

Interactive Chart: Compare market cap and monthly returns for all stocks mentioned above. To customize this tool, click here.


Kapitall's Eben Esterhuizen, CFA, does not own shares of any companies listed.

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